There are a lot of questions about how sustainable cryptocurrencies are in the long-term. Bitcoin is the first and most used network, so we have data about its daily activity and energy consumption.
Which is higher than you might expect, and growing rapidly – it already reached the same annual energy consumption as the entire country of Austria.
As well as a carbon footprint comparable to the state of Denmark.
How comes an online network has a carbon footprint?
Bitcoin transactions require computers and mining farms to stay online, servicing the network at all times. These farms earn money by processing transactions and bringing tiny fractions of Bitcoin as profit – they’re a business like any other.
Which naturally means people will try and build mining farms in countries with lax environmental regulations. They’re looking for cheap energy, which helps the profit margins.
It often leads them to countries like China, which are still actively reliant on their coal factories.
That’s how Bitcoin miners end up contributing to CO2 emissions.
Exact numbers are still up in the air
Because cryptocurrency usage and mining is global and decentralized, there is no way to make precise estimates. Everything we have is reliant on third party data and research authorities.
The Digiconomist team came up with a Bitcoin consumption index. It tracks energy trends and observes both annual network consumption and the effects of every single Bitcoin transaction.
According to their estimate at the moment of this writing, the Bitcoin network:
- Consumes 73.12 TWh of energy.
- Emits 34.73 Mt of CO2.
- Produces 9.17k of electronic waste.
Even though their numbers are imperfect, they provide a handy point of reference on just how large the effects of Bitcoin network are. It happens to be as large as major first-world countries.
How «green» consumer friendly is Bitcoin network?
Bitcoins exist in the virtual world, not the physical one. The energy we spend on the transactions is just as renewable or environmentally harmful as the energy we spend on cooking, heating, etc.
It’s true that Chinese mining operations use cheap coal-based energy and help produce massive amounts of CO2.
It’s also true that certain mining farms are entirely self-sufficient and use wind and solar energy to power their rigs.
Unfortunately, you can’t choose which of these mining operations is going to pick up and process your cryptocurrency transaction. Because third-world operations are so common, it’s more likely that active use of Bitcoin will only contribute to e-waste and carbon emissions.
It’s a symptom of a larger problem.
Energy is as clean as we make it
It’s a hot-button topic, no way around it. How do we help third-world countries transition into a more sustainable energy economy? What are the political and moral actions we should take to do so? How should these decisions be made?
There are a lot of difficult questions to address.
In a perfect world, high energy consumption of Bitcoin wouldn’t be an issue, because energy would be renewable. But in the real world, we have to factor in CO2 emissions and e-waste generated by every transaction.
Bitcoin network exists in an unhealthy environment, creating further complications. The higher the price of Bitcoin, the more energy it will consume – escalating our need to find sustainable solutions.