When we talk about cryptocurrencies, Bitcoin is dominating the headlines. The harbinger of the crypto era first appeared in 2009 and is still by far the most popular currency. However, there is a dark side to that. Bitcoin power consumption is off the charts and each transaction consumes more power than countries like Sweden or the Netherlands. Here are 8 facts about Bitcoin that will help you understand why this cryptocurrency harms the environment.
Cryptocurrencies are virtual currencies that can be traded or used to purchase goods and services. Bitcoin is the first and currently the largest digital currency in the world and has launched hundreds of other cryptocurrencies in its wake. It is decentralized, meaning that it operates without any central oversight or oversight of banks or governments, and instead relies on peer-to-peer technology to facilitate instant payments. Transactions are verified by individuals called “miners” through high-powered computers. An increasing number of traditional finance companies are investing heavily in the bitcoin market, recognizing some of its advantages such as high accessibility and proven security. Despite its popularity, Bitcoin has a dark side: its massive carbon footprint. Here are 8 facts about Bitcoin to understand why this cryptocurrency harms the environment.
1. Cryptocurrencies and Bitcoin have skyrocketed in value
Cryptocurrencies became popular in 2019 when developer Satoshi Nakamoto launched Bitcoin, the first decentralized cryptocurrency. Since its debut, the total cryptocurrency market cap has reached more than 3 trillion US dollars. In 2021, the price of bitcoin reached a level absolutely highvalued at over $65,000.
Figure 1: Bitcoin market price in US dollars, 2009-2022
2. Bitcoin creation is a very complex process
New bitcoins are generated through a process called mining, which consists of solving mathematical puzzles. With the increasing competition for this cryptocurrency, these puzzles are becoming increasingly difficult, making it impossible to solve using ordinary computers (CPUs). Miners now use more efficient computers called ASIC systems, which require more electricity to operate. Bitcoin also uses a code, known as Proof of Work (PoW), which entails using huge computer arrays to validate and secure the ever-growing number of transactions around the world.
3. Bitcoin data centers are huge and expensive to run
Bitcoins are generated in huge data centers, often referred to as “mining farms”. It’s made up of thousands of ASIC servers that cost anywhere between a few hundred dollars About 10,000 USD. These servers are usually running continuously because they are constantly mining Bitcoin. Huge cooling systems are necessary on mining farms to prevent servers from overheating. However, this significantly increases the electricity costs associated with operating these massive data centers.
4. Bitcoin mining requires huge amounts of electricity
Bitcoin requires huge amounts of energy. Every transaction used around 2100 kWhwhich is equivalent to what an average American household consumes in two months.
Moreover, Bitcoin mining is used on average 91 TWh of electricity annually, which is about seven times higher than that used to power Google searches around the world and beyond 0.5% of the world’s electricity. Within a year, countries like Finland, Sweden, the Netherlands, and Greece use roughly the same amount of energy. Moreover, the fragile power grids of some countries are threatened by crypto mining as they struggle to deal with the energy intensive process. Several cities in IranAnd KazakhstanBeside Kosovooften suffered from prolonged power outages due to bitcoin mining activities.
5. Bitcoin’s ecological footprint matters
According to estimates, Bitcoin emits about 57 million tons of carbon dioxide annually, which is roughly half a ton of carbon dioxide per transaction. To offset such a huge amount of emissions requires agriculture 300 million trees. Furthermore, a 2018 study published in The nature of climate change He suggested that in 16 to 22 years, Bitcoin use alone could push the world beyond 2°C Warming threshold for climate catastrophe.
6. Some countries have banned bitcoin or even cryptocurrencies entirely
Nine countries currently have complete ban On cryptocurrencies: Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, and Tunisia. While many governments have cited environmental concerns to justify their decision, many believe these steps come as a way to protect their financial systems. After the Chinese ban on Bitcoin, many operations moved to the United States. Kentucky It is by far the country that produces more carbon from cryptocurrency mining than any other, and currently provides 18.7% of the collective computing power of Bitcoin to mining, second only to New York at 19.9%.
7. Most Bitcoin farms around the world depend on fossil fuels
Bitcoin farms are often located in countries that Relies heavily on fossil fuels, such as Kazakhstan, Iran and Kosovo, which has raised concerns among environmentalists. Here, the energy-intensive process has a greater environmental impact even than countries that diversify their energy sources using renewables or even nuclear power. In the United States, bitcoin miners often Reviving polluting coal plants On the verge of bankruptcy, which represents a massive rise in emissions and threatens a partial return of coal in the country. Others use rift gas, another energy source responsible for heating the planet.
8. Do we have alternatives to Bitcoin and are they better?
The short answer is yes. There are a lot of better alternatives to the world’s most popular cryptocurrency. On average, other cryptocurrencies use 99% less electricity than Bitcoin. According to the post Campaign Launched by Greenpeace under the slogan “Change the code, not the climate,” a simple change to the Bitcoin software code can drastically reduce the energy it takes to be created and used. If this happens, it won’t be the first time: One of Bitcoin’s main competitors, Ethereum, recently announced Move to a less power consuming codeIt reduces its electricity consumption by 99.9% and significantly reduces its environmental impact.
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