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Let’s play a game: what do you think of energy Bitcoin does mining require the equivalent of only one year? London’s annual energy consumption? Higher. The Netherlands’? Higher. Alright, what about Argentina? Higher. The energy used to mine and distribute Bitcoin consumes 121.36 terawatt hours (TWh) per year. It’s above all of Argentina, 121 TWh per year—and it also catches up with Norway, which consumes 122.20 TWh per year.
If that confuses your mind, believe me, it took me a while to figure that out too. In simpler terms, the energy used by Bitcoin could power every kettle in the UK for 27 years. Imagine that, if every UK household got together to make a cup of tea, it would take 27 years to use the same amount of energy that an intangible cryptocurrency uses in a single year.
If that didn’t get my point enough, let’s take another example: One Bitcoin transaction equals the carbon footprint of 735,121 Visa transactions, or to put it in “broken” Gen Z terms, 55,280 hours of YouTube viewing. It depends Digiconimistwho created the Bitcoin Energy Consumption Index—a fascinating graph that tracks Bitcoin’s energy consumption, which shows a peak in consumption since March 2021.
Why Cryptocurrency Is Bad For The Environment And Why It’s Only Getting Worse
If you’ve been living under a rock for the past decade, let me briefly explain cryptocurrency for you. Of course, people have (and still write) books on this subjectso a single 800 word article will not do justice to such a complex topic—but I will do my best.
Cryptocurrency is a digital asset designed to function as a medium of exchange, similar to traditional money. However, unlike traditional cash, crypto is stored in a computerized database using cryptography to secure transactions, verify transfers, and control the creation of additional coins.
Bitcoin is the poster child of cryptocurrency. It was invented in 2008 by an unknown person, or group of people, in Japan who uses the name Satoshi Nakamoto—I know, this sounds like the start of a fictional drama. Despite its elusive origins, the decentralized currency that operates on a peer-to-peer network without the need for intermediaries or a central bank has become the cryptocurrency of choice for most around the world.
Bitcoin is created as a reward for a process known as mining, which partly explains why it is so energy-intensive. Forget shovels and pickaxes-think about Bitcoin mining tells computers to solve mathematical puzzles, which get more and more complex. Although over the past decade several different cryptocurrencies have appeared, from Dogecoin for Trumpcoin—we’ll stick to bitcoin for this example.
The bitcoin boom has sparked a digital gold rush, with thousands of bitcoin farms around the world, often in huge warehouses full of computers running 24 hours a day, like this one in Iceland. If you’re tired of not recycling plastics and want to mess up the environment even more than it already is, you can buy bitcoin farm yourself, with a modest starter pack priced at just under £50,000.
“As the resource intensity required to mine Bitcoin has increased in recent years, its potential impact on health and climate has become a serious concern,” said a data scientist. Alex de Vries warned in the Energy research and social sciences newspaper. And it only gets worse. David Gerard, the author of 50ft Blockchain Attack, warned “Bitcoin is literally anti-efficient. More efficient mining hardware won’t help—it will just compete with other efficient mining hardware. Bitcoin’s energy consumption, and therefore its CO2 production, just spirals outward.
Why do we humans have to be so self-destructive? I can’t write an article on climate change without using the word “spiral”, which is quite depressing. Bitcoin’s carbon issue hasn’t slowed its price either—which is approximately $8,000 from last year, clocking in at around $50,000 per token. Luckily, we have a slew of climate-focused businesses and philanthropists who have the means and the will to save us from ourselves, don’t we?
The Great Corporate Hypocrisy
Wrong. Despite the obvious fact that cryptocurrencies are messing up our planet, Bitcoin has always piqued ears that claim to care about our environment. Bitcoin price rose sharply in February 2021 after Tesla announced an investment in the cryptocurrency industry.
Critics such as David Gerard point out how this contradicts the e-car company’s previous stance on the environment. “Elon Musk wasted a lot of Tesla’s good work on the energy transition.” He told the BBC“It’s very bad, I don’t know how he can back down effectively.”
But there is an ounce of hope. Bitcoin proponents argue that its the carbon footprint is overestimated—if the computers that operate the room can be connected to renewable energy, the impact will be minimized. Supposedly, the “environmentally conscious” PayPal that also plunged its toes in the cryptocurrency jar, said, “more energy-efficient protocols are emerging.” Of course, if he killed Bitcoin, he would say so though.
Indeed, there are compelling arguments that Bitcoin can actually create positive change in the face of our doomed climate crisis. Nearly two-thirds of Bitcoin mining occurs in China, in regions with high coal-fired power generation, according to the scientific journal Joule Remarks. If imposed with a carbon tax, it could be an effective way to decarbonise the coal-centric economy.
Whether this is wishful thinking, anyone can guess. With the block chain, it is even difficult to place blame. Are the companies supporting Bitcoin? Is it Satoshi Nakamoto? Or is it all of us? I suppose the answer lies in the weighing of the pros and cons: I am not an economist, but the idea of a real international currency, independent of any central bank has its merits, but I prefer not to see the destruction of our planet for that to happen.