Bitcoin Has a Larger Carbon Footprint Than Some Countries
Bitcoin is still chugging along in its quest to become the dominant global digital currency, but there is a side to this popular cryptocurrency that many don’t know. A new study has found that Bitcoin requires enormous amounts of electricity to maintain its network, leaving a significant carbon footprint. So big, in fact, it amounts to the same environmental impact as that of Las Vegas or even small countries like Sri Lanka.
Researchers estimate that Bitcoin is responsible for generating more than 22 megatons of CO2 emission. But how does a digital currency generate such large emissions? Bitcoin is powered by what’s called ‘blockchain’ technology, which is used to confirm transactions and the transfer of funds. This process, however, requires massive amounts of electricity to undergo the validation process that ensures each party is fairly represented in each transaction.
“Participation in the Bitcoin blockchain validation process requires specialized hardware and vast amounts of electricity, which translates into a significant carbon footprint,” writes a research team led by Christian Stoll of the Technical University of Munich and the Massachusetts Institute of Technology’s Center for Energy and Environmental Policy Research.
Bitcoin ‘miners’ are people who participate in the peer-to-peer network that confirm each transaction is valid, protecting the entire system from fraud. By doing so, miners solve mathematical puzzles that confirm the numerical signatures of each transaction, and in return, they receive a small amount of Bitcoin for their services. To solve these equations, massive computing power is needed to crunch the numbers, which in turn requires high amounts of electricity.
As more and more users turn to Bitcoin as either an investment or as a means of payment, its carbon footprint will only continue to increase. Bitcoin is becoming a serious hindrance to the world’s efforts to transition away from fossil fuels.
Perhaps even more troubling is the fact that this study only takes into account Bitcoin, when there are thousands of other cryptocurrencies that function on a similar network and using large amounts of electricity. Taking into account the output of three of the largest cryptocurrencies, the total amount of power consumption is more than doubled.
With this knowledge, cryptocurrency critics and environmentalists pose the question of whether the cost of digital currencies are worth the high amount of carbon emissions it is causing. While cryptocurrencies make up a small portion of the worlds overall emissions, they argue that much of our carbon emissions are due to necessary sources, like heating our homes, cooking, or transportation. Going forward, expect cryptocurrencies like Bitcoin to undergo further scrutiny for its serious potential to impact our environment.