Let's find out how much energy Bitcoin and other cryptocurrencies use.
The Woman Post | Catalina Mejía Pizano
Before analyzing the impact of cryptocurrency on climate and the environment, let's begin with the basics! What on Earth does cryptocurrency mean? A cryptocurrency is a virtual form of exchange that only exists electronically. It also has no physical counterpart, such as a dollar bill or a coin. Cryptocurrencies are decentralized, meaning there is no central authority to regulate them, and the transactions are anonymous since the people who make them are not revealed. But, what's not to like about this Marketplace? Let's find out how much energy Bitcoin and other cryptocurrencies use.
First, it is important to highlight that Bitcoin and other proof-of-work cryptocurrencies need a lot of energy, even more than entire countries use to perform the computations related to crypto mining. Bitcoin consumes approximately 1,700KwH per transaction. This is almost twice the monthly energy used by a standard home in the USA. But that's not all! The computers consume additional energy since they constantly generate heat and must be kept cool. According to the University of Cambridge Analysis, bitcoin mining consumes 121.36 terawatt-hours a year. If we compare this number to others, it is more than all of the energy consumed by Argentina and even more than the sum of the energy consumed by Facebook, Google, Apple, and Microsoft.
Bitcoin produces 36.95 megatons of carbon dioxide per year (which is comparable to New Zealand). But let's now translate these numbers into climate change predictions. It has been estimated that in 30 years, Bitcoin could alone increase global temperatures by 2 degrees Celsius. You may now be wondering where do Bitcoin mining operations take place. The majority occur in the United States, accounting for 35% of the energy used in Bitcoin mining activities. Other countries with large mining operations include Russia and Kazakhstan. It is worth mentioning that fossil fuels are still dominant in the USA, and Russia is also a fossil fuel giant. Between 2015 and 2021, Bitcoin energy consumption increased close to 62-fold. As mentioned by Cambridge University, just 39% of this energy is sourced by renewables, especially hydropower, which is still controversial due to its impact on ecosystems and animals.
Greenidge Generation is a former coal power plant in Dresden, New York that changed to natural gas and began bitcoin mining. Power plants such as this one are intensive in water consumption. Greenidge uses 139 million gallons of freshwater each day from Seneca Lake to cool the plant. The water is then discharged 30 to 50 degrees hotter than the lake's average temperature, threatening the lake's ecosystems and wildlife.
The question is, can we make cryptocurrencies eco-friendly? Several projects are seeking to lower the carbon footprint of cryptocurrency. For instance, Tesla CEO Elon Musk had a meeting with the CEOs of top North American crypto mining companies to discuss their energy use. The outcome was the foundation of a new Bitcoin Mining Council to encourage energy transparency. The Crypto Climate Accord is another initiative that has the objective of making blockchains operate on 100 percent renewable energy by 2025 as well as achieving a net-zero emissions cryptocurrency industry by the year 2040. Ethereum is also trying to reduce its energy use by 99.95% by 2022 by transitioning to an alternative validation system known as proof of stake. Some experts also hope that the new generation of cryptocurrencies will be greener!