At the time of writing the world’s most famous article, Satoshi Nakamoto outlined the process of mining bitcoin (BTC). It was decided that new coins would be struck with proof of work. In order to perform this check and be able to expand the cryptocurrency, computers must solve complex mathematical operations.
At first there were few miners. However, that all changed before Bitcoin first started bullish. Competition in the mining industry has increased, which has led to a sharp rise in the cost of competing equipment. More importantly, energy demands increased with the advent of new machines that needed energy primarily for processing and cooling.
Eight years later, the demand for energy for mining bitcoin has increased and today has reached 116.71 TWh per year, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI). At first glance, this is a lot, right? But let’s take a closer look at the data to better understand the real environmental impact of Bitcoin mining.
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Energy use when mining bitcoin
Several influencers have recently appeared on social media linking Bitcoin to an alleged increase in the use of fossil fuels, especially coal. In fact, some countries, such as China, use coal as an important source of energy. But is this the most important fuel for the energy used?
According to a study published by the University of Cambridge in September:
“Hydropower is listed as the most important source of energy, with 62% of cannabis respondents indicating that mining is driven by hydropower. Other types of clean energy (such as wind and solar) rank lower after coal and natural gas, which account for 38% and 36% of respondents’ energy sources, respectively. ”
According to CBECI, the world produces 25,082 TWh of energy annually. Only 20,863 TWh is consumed, which means a loss of 16.82%. Bitcoin accounts for 0.47% of all energy produced and only 0.54% of waste energy worldwide.
Another study recently published by Galaxy Digital compared the use of bitcoin for energy to banking and gold mining. According to the document, the gold mining industry uses 240.61 TWh annually, while the banking system uses 263.72 TWh.
Even more worrisome is what the CBECI is pointing to regarding unused electronic equipment. In the United States alone, when unused connected devices use one year of power, the Bitcoin network will provide power for about two years.
Hence, Bitcoin’s energy consumption is clearly not as relevant as they say compared to global energy production and waste. Not to mention, a consumption of about 116 TWh is responsible for ensuring safety and access to a dignified life for millions of people around the world.
When we talk about Bitcoin being green, we need to really understand the carbon footprint.
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Bitcoin’s carbon footprint
Unfortunately, most of the energy currently generated results in high carbon emissions, and this should be central and most important when discussing Bitcoin’s environmental impact.
Bitcoin’s carbon footprint is between 22 and 22.9 tons of carbon dioxide, according to data published in the scientific journal Joule in 2019. This is a really significant amount that can be compared to the emissions in Jordan or Sri Lanka. However, for example, this is significantly less than the energy consumption of the US Army, which, according to data compiled by Statista, emits 59 million tons of carbon dioxide.
Fortunately, there are easy ways to offset Bitcoin’s carbon footprint. By tokenizing assets, some companies have decided to tokenize carbon credits, which makes it easier for miners and anyone else involved in the cryptocurrency industry to reduce the power generated by the electrical energy used in mining.
Looking ahead, we must pay attention to reducing the use of fossil fuels in order to reduce the remaining carbon footprint.
It is noteworthy that the environmental problem is not being solved only by reducing the use of fossil fuels. Even more important is the optimization of the use of generated energy with a focus on reducing waste and unnecessary carbon emissions in the process.