The idea of a blockchain-based currency has obvious appeal to environmentalists. A decentralised, digital currency not tied to any nation-state or central bank could help reduce carbon emissions by removing the need for brick-and-mortar banks and other financial institutions. But is bitcoin that green? Environmentalists argue that bitcoin production harms the environment by mining gold and other precious metals. Some other cryptocurrencies use Ethereum and Monero and other bitcoin reliable mining Software, one of our favourite privacy coins. Here we will tell you why bitcoin is bad for the environment.
Why is Bitcoin Bad for The Environment?
Bitcoin is bad for the environment because it requires a lot of energy. Bitcoin miners have been estimated to use approximately 1,000 megawatts of electricity. That’s more than Austria. To put that in perspective, if Bitcoin miners were a country, they’d rank 61st in global electricity consumption.
All that power use comes from coal-fired and natural gas-powered plants, which produce greenhouse gases that contribute to climate change. An estimated 2,000 metric tons of CO2 emissions are generated per day by Bitcoin mining alone. Bitcoin uses so much energy because it’s decentralised and uses proof-of-work (PoW) to solve transaction blocks on its blockchain network. Both require only 1/10th as much electricity as bitcoin when mining new coins but use 1/20th as much electricity when processing transactions on their ledger networks. Iota is particularly efficient.
As of January 2018, a single bitcoin transaction required 215-kilowatt hours (kWh) of energy. That’s about the same amount of electricity an average US household burns in 10 days. While that may seem like a lot, it’s not even close to being the most energy-hungry cryptocurrency on the market. Bitcoin uses roughly 0.1% of all energy worldwide, and for comparison’s sake, Visa and Mastercard use about 0.03% and 0.01%, respectively.
The high power consumption is linked to the fact that including a block in the blockchain requires solving an asymmetric proof-of-work puzzle. The way Bitcoin works is that each time a transaction occurs, it gets added to a public ledger called the blockchain. A large database spread across many computers. To verify each transaction, miners use their computing power to solve an asymmetric proof-of-work puzzle. The first miner to solve it adds their block of transactions onto the blockchain and receives newly created bitcoins as payment.
The network doesn’t just use one type of computer. Instead, millions of different types work together as nodes on its decentralised network, meaning there’s no single point of failure. This makes it similar in scale to countries like Ireland or Austria in energy consumption and far more significant than any other cryptocurrency by some orders of magnitude.
The Bitcoin network is consuming more energy than some countries. It’s consuming more energy than Ireland and Austria combined, making it one of the largest electricity consumers globally.
If you’re wondering why this is a problem for Bitcoin users, it’s because the amount of power that goes into mining isn’t sustainable at this rate. As mining grows in popularity and availability, more people will want to join the network and mine coins. However, at current consumption levels, they won’t be able to do so because there isn’t enough electricity available worldwide to keep up with all those miners.
Bitcoin consumes lots of energy.
In a world where we’re increasingly aware of global warming and climate change, the idea that Bitcoin consumes enormous energy is hard to swallow. The amount of energy required to power Bitcoin mining is truly staggering. It’s estimated that it uses as much electricity per day as the whole country of Denmark. This puts it in an even more stark contrast with traditional financial systems like banks, which use far less power because they don’t need to solve mathematical puzzles.
Bitcoin has a reputation for being energy-intensive, but it’s important to understand that the technology is still young and evolving. You can also use it for investments. As the currency becomes more widely used and transactions become more efficient, we’ll likely see a decrease in energy consumption.