Bitcoin is dominating the world news and stock markets. However, many people may not know about the energy usage required for mining Bitcoin and its effect on the world. With all-time record highs of Bitcoin in 2021, we see a parallel rise in carbon emissions. Will this rise continue for good?
What Is Bitcoin Mining?
Bitcoin mining is the process of capturing block rewards, mined by groups of miners. These Bitcoin minors plug machines into a wall that takes up electricity, then work away at the Bitcoins network, racing with other miners for the Bitcoin prize. This speed is measured by ‘hashrate’ and calculates the amount of computer power used.
The higher the hashrate, the more Bitcoin that can be mined. With the global increase in Bitcoin popularity, we are seeing huge factories and warehouses crammed with mining rigs. There are also solo Bitcoin miners who work with these larger facilities to collaborate and gain a higher hashrate. These miners use a large amount of electricity as they are constantly working.
Bitcoin And It’s Effect On The Environment
With the influx of more companies mining for Bitcoin, energy usage increases dramatically. This energy usage has a knock-on effect on the environment. Studies from the Bitcoin Energy Consumption Index and Bitcoin’s energy use in 2018 translate to a carbon footprint of 19.0 to 29.6 million metric tons of CO2 (475 g CO2 / kWh). It is currently estimated that the Bitcoin network uses up to 0.21% of the world’s supply.
|Type Of Activity||Average Carbon Footprint (per transaction/search)|
|Bitcoin Transaction||233.4kg – 363.5kg of CO2|
|VISA Transaction||0.4g CO2|
|Google Search||0.8g CO2|
To put the Bitcoin energy consumption in comparison for you, check out these equivalents:
- 1 Bitcoin Transaction = 720,792 VISA transactions
- 1 Bitcoin Transaction = 54,203 hours of watching Youtube
- 1 Bitcoin Transaction = 6,058 cups of espresso
When talking about Bitcoin mining, we should speak of application-specific integrated circuits. Known more commonly as ASIC these devices are made for mining Bitcoin. Recently, Enegix, a Bitcoin mining firm, set plans for a warehouse consisting of 50,000 ASIC miners. This new facility could alone power 180,000 U.S. homes. If we look at the Bitcoin Network as a whole, it could power over 2.25m homes according to Cambridge Bitcoin Electricity Consumption Index data on Bitcoin.
Another important detail to consider is the ASIC devices. These produce a tonne of electronic waste and they’re very inefficient. On average, these devices become obsolete in under two years. They cannot be used to any other industry other than mining, so cannot be repurposed for other sectors.
Bitcoin Compared To Countries Energy Usage
As we see a rise in the Bitcoin price, we also notice an increase in energy usage from Bitcoin mining. So much that Bitcoin can compare to the total energy usage of over 159 countries. Yes, you read that right, Bitcoin consumes more power than 159 countries.
This equates to the energy usage of 19 European countries, such as Serbia and Belgium. In comparison to the United States, Bitcoin uses 0.8% of its energy demand. This isn’t even considering the other ways Bitcoin is used, such as ATM’s.
Below is a graph showing Bitcoin in comparison to numerous countries energy usage, some may surprise you.
Alternate Payment Systems Comparison
In an average year, the financial industry completes 500bn transactions. Bitcoin is responsible for 100m of these financial transactions. Bitcoin uses a lot more energy than the average transaction, so it is currently causing an unnecessary strain on the environment.
Bitcoin And Electricity Spikes
In 2019, Iran noticed a huge spike in electricity consumption. After investigating, they located two factories with 1,000 ASIC mining machines. The rise was a shocking 7% in power demand, with cryptocurrency being the primary source of the increase.
In China, Bitcoin was considered to be added to the list of banned activities. This is due to the pollution and waste that is produced by mining bitcoin. In 2017, Chinese regulators took further action by actually closing Bitcoin exchanges. This was an attempt to prevent further mining and abnormal electricity consumption.
Did you know? On average, 70% of all bitcoin mining revenue is returned straight into paying for electricity.
This has led people going to extreme lengths to get the cheapest energy possible. Bitcoin miners have located to remote areas, such as the mountains in Washington State, Outer Mongolia and Iceland. This new search for cheap energy has even seen a rise in cases of electricity theft.
Bitcoin And Renewable Energy
So, maybe you’re thinking, why can’t Bitcoin miners use renewable energy? Some reports have claimed that they use renewable energy, however, many studies dispute this claim.
Bitcoin is all about money, these miners are looking for the cheapest deal possible to make a nice earning. We’ve seen these miners flocking across the globe in search of the cheapest power possible, we doubt they care about if it is renewable or not. Cheaper power such as natural gas, fossil fuels and oil make them extremely more attractive than a more premium renewable source.
Bitcoin And The Future
Each day we see headlines talking about new record highs of Bitcoin prices and we can’t see it going away any time soon. The electricity it consumes will only increase as more companies invest in Bitcoin mining. Scientists are expecting a surge that will only continue to rise, the more Bitcoin popularity continues.
If the price of Bitcoin goes up and up, you can only expect energy consumption to match. We can only hope that we can develop a way to use renewable, green energy to support Bitcoin; otherwise, we could be looking at a massive crisis in the future.