Bitcoin mining consumes more electricity than most countries, study suggests, highlighting the immense energy demands of the digital currency and raising concerns about its environmental impact.
Bitcoin Mining Consumes More Electricity Than Most Countries, Says Report
Bitcoin mining has been found to consume more electricity than most countries, according to a new report highlighting its damaging environmental impact. Mining is the process by which transactions are added to and validated on the blockchain, the public ledger for cryptocurrencies. Miners compete to solve complex mathematical puzzles using powerful hardware, and they are rewarded with new Bitcoin for their efforts.
In 2020 to 2021, Bitcoin consumed 173.42 terawatt hours of electricity, ranking it 27th among nations. This amount surpasses countries like Pakistan, which has a population of over 230 million people. The carbon footprint resulting from Bitcoin mining during this period was equivalent to burning 84 billion pounds of coal.
To offset this environmental impact, a study by the United Nations University suggests that 3.9 billion trees would need to be planted, covering an area almost equal to the Netherlands, Switzerland, or Denmark. Professor Kaveh Madani commented that technological innovations often come with unintended consequences, and Bitcoin is no exception.
The research conducted by the UN team also revealed that Bitcoin mining heavily relies on fossil fuels. Coal made up 45% of the supply mix, followed by natural gas at 21%. Renewables like solar and wind only provided a small proportion of the electricity used for mining between 2020 and 2021. However, the Bitcoin Mining Council, representing 43% of miners worldwide, claims that the process has become more eco-friendly since then. They report that 59.9% of their members’ electricity came from sustainable sources in the first half of 2023. However, these figures are difficult to verify and represent less than half of the overall network.
China was the largest Bitcoin mining nation at the time of the UN study. However, it has since been overtaken by the United States due to Beijing’s crackdown on the practice. The top 10 countries that mined the most Bitcoin were responsible for 92% of the climate footprint.
Professor Madani emphasized that the findings should not discourage the use of digital currencies but should instead encourage investments in regulatory interventions and technological advancements that improve the efficiency of the global financial system without harming the environment.
While some blockchains have transitioned to greener alternatives, such as the Ethereum network, Bitcoin miners have not followed suit. The Ethereum network made miners obsolete in September 2022 after an upgrade that relies on people voluntarily locking up their cryptocurrency to approve transactions. According to the Ethereum Foundation, this approach uses 99% less energy. Greenpeace has urged Bitcoin miners to adopt similar practices, but their pleas have not been heeded.
In conclusion, the environmental impact of Bitcoin mining is a significant concern due to its high energy consumption. Efforts to make the process more sustainable are necessary to mitigate its damaging effects on the environment.