Is Bitcoin Bad for the Environment or Not? Opinions Differ, but the Truth Is One

Bitcoin mining uses energy comparable to some countries. This is often seen as one of Bitcoin's biggest downsides, as its use is harmful to the environment. However, Bitcoin advocates argue that the situation is more complex and that Bitcoin may in some ways be a sustainable technology. What is the truth and who is right?

Proof of work

The Bitcoin system is protected from spam attacks by a mechanism known as proof of work. The first version of this algorithm was developed by Cynthia Dwork and Moni Naor in 1993, long before Bitcoin existed. The essence of this mechanism is that it is necessary to perform calculations (do “work”) in order to obtain permission to conduct transactions (initially, to send emails).

Validating transactions requires computing power to filter out bad actors. The network rewards them with previously unused bitcoins to motivate validators. This is how bitcoins are “mined”; hence the process of validation is called “mining.”

In the early days of Bitcoin mining, it was a low-resource activity. Anyone could do it using a regular computer. However, as demand for Bitcoin grew, mining became more difficult, requiring more and more energy to solve the math problems.

Mining is now an industrial scale activity. Mining farms occupy large areas filled with devices created for the sole purpose of solving Bitcoin puzzles as quickly as possible (beating other miners and getting a reward). By 2018, the energy consumption of the entire Bitcoin network had reached a level comparable to Nigeria and Denmark.

Bitcoin's Impact on the Environment

Bitcoin mining activities impact the environment in four main ways:

  • Mining creates a carbon footprint
  • Mining requires significant amounts of water.
  • Mining requires a lot of electricity.
  • Mining produces electronic waste

Taking all these factors into account, it can be argued that Bitcoin has a significant impact on the environment. These data show that Bitcoin consumes as much electricity and water and generates the same amount of hazardous waste as some countries.

While it can be hard to wrap your head around what this means when you read that Bitcoin consumes as much energy as Poland, you can zoom in and see the equivalent impact of each Bitcoin transaction. This paints a more vivid picture. According to Digiconomist, a single Bitcoin transaction consumes over 1,100 kWh (equal to the average American household’s consumption for 38 days), uses 17,500 liters of fresh water (equal to the volume of a backyard swimming pool), generates over 280 grams of e-waste (more than 1.5 iPhone 12s), and emits 620 kg of CO2 (equal to 1.3 million VISA transactions or 11.7 years of YouTube video viewing).

Statista provides similar estimates. Moreover, gold mining is less harmful to the environment than BTC mining, if you compare the value of BTC and gold in US dollars. Although the exact data is not associated with these estimates, the articles seem to rely on data published in 2023 or earlier.

Tesla cited environmental impact as a reason for ending support for Bitcoin payments in 2021, shortly after introducing the option. Ethereum switched from proof-of-work to the more environmentally friendly proof-of-stake algorithm in 2022.

Read more: Tesla to stop accepting bitcoin due to 'environmental concerns'

Fossil fuels are the primary source of energy for most mining operations. Various sources estimate that fossil fuel use in powering Bitcoin mining ranges from 50 to 90 percent.

What Bitcoin Proponents Say…

First, the Digital Asset Research Institute refutes that the data and articles about Bitcoin’s environmental harm are accurate. According to the study, the erroneous 2018 data suggesting high levels of environmental harm from Bitcoin have been cited thousands of times through 2024. Accurate studies accounted for only 2% of all materials on the topic. The DARI article argues that 2022 is the year for more rigorous reporting on Bitcoin’s environmental impact.

Since the environmental impact of mining is a major concern, various mining companies have started looking for ways to make Bitcoin mining more environmentally friendly, and this search has proven successful. Initiatives in the 2020s have shown that companies are using excess power to mine Bitcoin instead of simply wasting that power and the resources used to produce it.

A New York City pool mines bitcoins and uses the excess energy generated to heat its pools.

Or, in other words, they heat their pools as usual and make money from the excess electricity that is a by-product of this process.

This is clearly carbon… pic.twitter.com/V0VeDwBicy

— Nick Carter (@nic__carter) June 22, 2023

Another way to make Bitcoin mining more environmentally friendly is to use renewable energy sources. For example, Ethiopia uses its Grand Ethiopian Renaissance Dam to cleanly mine Bitcoin.

Research in 2024 shows that in

Source: cryptonews.net

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