Cryptocurrency is a digital currency that can be used to purchase goods and services. To secure transactions, it uses blockchain technology, which is essentially a gigantic database of information that cannot be altered or tampered with.
There are many different cryptocurrencies – Dogecoin, Ripple, Ethereum, etc. – but Bitcoin is the most popular. It was the first decentralized cryptocurrency, launched in 2009. Bitcoin has inspired hundreds of imitators but remains the largest cryptocurrency by market cap.
Public blockchains like Bitcoin are extremely transparent. The nature of blockchain technology means that all data is immutable, traceable and permanent, meaning anyone can see the balance and transactions of any wallet address. Nobody, not the government, not even advanced hackers can contest, change or delete what you own on the blockchain.
complex process
In the cryptocurrency world, mining is performed by complex, high-performance computers. Bitcoin miners run complex computer rigs to solve complicated mathematical puzzles called proof-of-work (PoW) to confirm groups of transactions called blocks; If successful, these blocks are added to the blockchain record and miners are rewarded with a small number of bitcoins. Other participants in the bitcoin market can buy or sell tokens through cryptocurrency exchanges or peer-to-peer.
Bitcoin is booming and its price surpassed $60,000 in October 2021, but its consumption of computer hardware and energy is huge. Here are some of the reasons Bitcoin is bad for the environment.
To quote Elon Musk, “The energy consumption trend for cryptocurrencies over the last few months is insane.” Musk was referring to the amount of energy required to create the “mining” of Bitcoin, which is mined by high-performance computers that convert in an energy-intensive process solving complex mathematical puzzles. This process often relies on fossil fuels, particularly coal, in most cases.
To put things in perspective, analysts at Deutsche Bank estimated that if Bitcoin were a country, it would use about the same amount of electricity per year as Ukraine.
As of March 2021, Bitcoin’s electrical footprint accounted for just over 75 percent of total energy production in the Netherlands and about 9 percent in Russia. Similarly, there are various other researchers who claim how disastrous the virtual coin is for the environment. A bitcoin transaction reportedly uses 1,544 kWh of energy, which is equivalent to the energy that can power an average US household for 53 days.
Due to the high energy consumption, a large amount of electronic waste (e-waste) is produced when mining the virtual currency.
Since the lifespan of the equipment Bitcoin miners use is only around 18 months, a lot of hardware is quickly consumed and eventually becomes e-waste. The researchers claim that the e-waste produced by Bitcoin per year (24 kilotons) is equal to that produced by the Netherlands.
Bitcoin mining consumes an enormous amount of energy, resulting in a larger carbon footprint with each passing year. As Bitcoin’s value increases, so does its mining, which means the puzzles are getting more complex and companies are investing in computing power.
While bitcoin has long been criticized for its negative environmental impact, its advocates still say that switching to renewable sources would reduce its carbon emissions. But the truth is that Bitcoin still consumes a colossal amount of energy.
Cryptocurrencies need to become more sustainable. They cannot ignore environmental concerns if they want wider adoption, and that newer and greener cryptocurrencies will eventually eclipse Bitcoin.
The author is the founder of Smiling Tree
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