Published on
Tuesday, May 3, 2022
By Christopher Schulz
Translated by Emma Finney
For some they are the future of the financial business, for others digital gimmicks: Cryptocurrencies are dividing the world. Maybe even in the truest sense of the word when it comes to their carbon footprint.
Bitcoin mining alone in 2017 caused emissions of 69 million tons of carbon. That is almost 2% of the CO2 emissions of the entire European Union. A blockchain transaction consumes as much electricity as an entire household in a week – and there are over 300,000 such transactions every day. The energy for this, in turn, is often obtained from fossil fuels. This leads to a devastating carbon footprint. According to a study by the University of Hawaii at Manoa, if used as it is now, Bitcoin could generate enough emissions to raise the global temperature to 2 degrees Celsius by 2033 — an ecological catastrophe.
Why Does Bitcoin Use So Much Energy?
Dollars, Euros and Other Currencies Are Printed, But Where Does Bitcoin Come From? Bitcoin is a decentralized digital currency generated through mining. In the case of Bitcoin, the concept behind it is called “Proof of Work”. Graphics cards are particularly suitable for this because they can “calculate” faster than other processors. However, if a graphics card generates Bitcoin under full load, it consumes electricity. Lots of electricity. According to the New York Times, bitcoin mining consumes about 91 terawatt hours annually. That’s more than the annual electricity consumption of all of Finland – a country of 5.5 million people. That’s almost 0.5% of all global electricity consumption and a 10-fold increase compared to five years ago. It is an undeniable fact that more and more coins are mined: in 2013 there were just 11 million bitcoins and in 2018 there are now 17 million in total.
Green Cryptocurrency? Proof of use
Some experts are already predicting Bitcoin’s demise due to its environmental costs. Elon Musk sparked a storm of outrage in 2021 when he stopped accepting Bitcoin as payment at Tesla. Professor Roger Wattenhofer from ETH Zurich is also critical of Bitcoin. His opinion: “It is difficult to accept that in many places there are restrictions with regard to climate change and at the same time the immense and very likely further increasing energy requirements of Bitcoin,” says the Swiss computer scientist.
An alternative is the “proof-of-stake concept”. Here no complicated arithmetic tasks are solved as with Bitcoin and coins are not produced by mining. Instead, the blockchain works in such a way that new coins are created from old ones – to put it simply. That’s good for the climate: The energy costs are significantly lower with the “Proof of Stake”. The popular cryptocurrency Nano produces 0.000112 transaction costs in kilowatts per hour – Bitcoin, on the other hand, produces 1.544: that’s over 7,000% more.
Here is a small overview: Cryptocurrency according to transaction costs in kilowatts per hour (KWh)
Proof of Stake Coins
- Nano 0.000112kWh
- Cardano 0.5479kWh
- Stellar 0.00003 kWh
Proof of Work Coins
- Ethereum 62.56kWh
- Bitcoin 1,544kWh
Depending on the process, there can be large differences in power consumption.
Conclusion – Is There a Sustainable Future for Cryptocurrency?
Bitcoin’s energy balance is disastrous. This is due to the concept of Proof of Work. With proof of stake, on the other hand, cryptocurrencies can massively reduce their power consumption. Nevertheless, cryptocurrencies will continue to require electricity in the future. Cryptocurrencies can only be carbon neutral if they get their electricity from renewable energy sources. Fossil fuels are completely unsuitable as energy carriers.
At ForTomorrow we are driving the energy transition and want to make the EU climate-neutral by 2040. We want to enable everyone to offset their carbon footprint. Join us and become part of our climate community.
Sources and further information:
Egiyi, Modesta Amaka. Ofoegbu, Grace Nyereugwu. (2020, March 03). Cryptocurrency and Climate Change: An Overview. International Journal of Mechanical Engineering and Technology. (IJMET). [accessed on 25.04.2022].
Kim, E. (2021, 07 Sep). Bitcoin mining consumes 0.5% of all electricity consumed globally and 7 times Google’s total, according to new report. Business Insider. [accessed on 25.04.2022].
Stein, A. (2022, April 07). The unpleasant side effect of Bitcoins. The world. [accessed on 25.04.2022].
Schiller, K. (2021, March 31). Proof of Work and Proof of Stake explained. blockchain world. [accessed on 25.04.2022].
Maksimenka, I. (2021, August 25). Green Coins: Top 9 Green Cryptocurrencies. beincrypto. [accessed on 25.04.2022].
RND/dpa. (2022, April 09). Why the cryptocurrency Bitcoin is a problem for the climate. RND. [accessed on 25.04.2022].
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