Why bitcoin mining is disastrous for the environment

Summary

• Time and again, environmentalists and critiques have criticised the rise in the use of cryptocurrency, especially Bitcoin.
• The Bitcoin ecosystem is extensively resource-based and energy-intensive.
• Elon Musk’s tweets regarding Bitcoin mining have garnered much attention off late.

To everyone’s surprise, Tesla CEO Elon Musk released a statement earlier this year stating that Tesla will not accept Bitcoins anymore as a mode of transaction. The decision was attributed to the adverse effects that Bitcoin mining causes on the environment. In June, he tweeted that that Tesla will resume accepting bitcoins if miners depend more on renewable energy.

Understanding Bitcoin mining via Musk’s tweets

Earlier this year, Tesla suspended vehicle purchases using Bitcoin. Elon Musk took over to Twitter and expressed concerns about the speedy rise in the use of fossil fuels for Bitcoin mining and transactions, particularly coal.

He tweeted that while Cryptocurrency may have a promising future, the world cannot put the environment’s health at stake.

More recently in June, Musk stirred the Bitcoin world again. This time, he cascaded that once there was a confirmation of reasonable clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.

Musk’s belief is not a new concept. Time and again, environmentalists and critiques have criticised the rise in the use of cryptocurrency, especially Bitcoin. Its usage means more Bitcoin mining, which means more fossil fuel exhaustion.

Image source: © Josefkubes | Megapixl.com

GOOD READ: Decoding Musk’s bittersweet relationship with Bitcoin

Decoding Bitcoin

Bitcoin is a type of cryptocurrency. In 2009, Satoshi Nakamoto launched Bitcoin as an alternative to the traditional form of currency. The most significant disadvantage of traditional money is that the federal banks centralise it.

To overcome this, Satoshi Nakamoto came up with the cryptocurrency “Bitcoin” to enable people to make transactions without involving any central authority.

Bitcoin mining

When person A wants to make a transaction to person B, they need to make it through Bitcoin mining. Bitcoin mining is also known as Proof of work.

Miners have to solve complex mathematical equations to open the doors for the transaction. These transactions are then added to a chain, which is known as the Blockchain. In return, miners earn Bitcoins.

ALSO WATCH: Is Bitcoin Mining Worsening The Climate Change Problem?

Bitcoin mining & environmental hazards

The bitcoin ecosystem is extensively resource-based and energy-intensive. The computers that are used for Bitcoin mining run on high-power processors. These processors are very energy intensive.

To generate more Bitcoins, miners stack on supercomputers: fill up warehouses, industrial parks and, even villages. According to the Cambridge Bitcoin Electricity Consumption Index, the total energy consumed by the bitcoin mining process could reach 128 TWh in 2021.

A Deutsche Bank expert states that if Bitcoin were a country, it would use around the same amount of electricity a year to mine as Switzerland does in total.

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Why does bitcoin consume 'insane' energy?

Bitcoin uses ten times more electricity than Google! A single amount of Bitcoin transaction consumes electricity of 18 US households for a whole day, according to a report by S&P Global. Bitcoin mining energy costs raise concern, and prompt little action. If Bitcoin mining increases, it might push global warming above 2 degrees Celcius within less than three decades.

A study published by Digiconomist that calculates Bitcoin’s climate impact showed that the Bitcoin network could consume as much energy as all data centres globally, with an associated carbon footprint matching London’s footprint size.

However, Cryptocurrency has its advantages like accessible foreign funds transfer and no or less fee requirement, unlike traditional currency. They are even better than credit cards, given that lesser fees are charged.

But here is some food for thought- should all these advantages be prioritised on the value of a degrading global environment? A lot of us would not think so!

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