What is the impact of Bitcoin on Climate and the Environment?

As Bitcoin or any other cryptocurrencies are not backed by physical assets and are not seen as legal currencies in most countries at the moment, its price is determined purely because of people's confidence. So, if more people want to own it (demand), the value goes up; if fewer people want to own it (supply), its value goes down.

Bitcoin's price is generally rising due to the increased demand of users holding it. However, this also means that all other cryptocurrencies could follow the same pattern.

While many investors and corporations can enjoy great profit boosts because of Bitcoin, it's perhaps time for us to also discuss how cryptocurrencies can affect the world and nature as a whole.

How does Bitcoin affect climate and environment?

First, understand how cryptocurrencies work. They are data structures that store information about the ownership of units and can be easily transferred between users.

Each coin contains a public key (a string of numbers) and a private one (another string of numbers). Anyone can share cryptocurrencies by matching the public keys of both users. After being transferred, they can be stored in a digital wallet or on the Blockchain.

Each node (desktop computer connected to the network) will have its copy of it. If someone decides to spend a coin, a new transaction is added to the end of this ledger, and it will update itself.

To add a new transaction, people from all over the world compete in complex mathematical problems. The one who solves it gets rewarded with newly created coins for his work (a mining process). In this way, more cryptocurrencies can be made, and that's how it circulates.

So given its nature, how could Bitcoin lead to a greener world?

As the Blockchain is constantly growing (due to new transactions) and its nodes need to match each other, there needs to be a high amount of computing power for all computers involved in mining cryptocurrencies to stay in sync with each other.

The more people join this race, the higher the computing power and the electricity cost needed to keep in sync and know more in detail on TOP Bitcoin Robot. This generally leads to a higher price for electricity used by miners worldwide. According to Digiconomist, Bitcoin alone uses almost as much energy as Serbia.

Although nothing is clear on how much this consumes, many researchers agree that the numbers are high. For example, in his article, Alex de Vries pointed out that these numbers could even double by the end of 2018. If this comes true, it would mean that Bitcoin alone consumes more electricity per year than all 159 countries in the world combined (except for China and the US).

Another research by Digiconomist took a look at this and compared it to countries: If Bitcoin were a country, it would be ranked 61st in the world concerning electricity consumption. With 0.29% of the whole energy demand worldwide, only three countries use less than that: Syria (0.19%), Venezuela (0.03%), and Kuwait (0.01%).

If you look at this comparison, you can see that Bitcoin uses more or less ten times as much electricity than countries such as the US and China (ranked first and second in the world by energy usage).

This high electricity consumption is not necessarily harmful, though. People often argue that using renewable resources for mining cryptocurrencies is good. However, this argument has two sides: on the one hand, cryptocurrencies could increase the usage of renewable resources and create a greener world.

On the other hand, it is so profitable to use these resources for mining that it can be overwhelming. There have been reports worldwide where companies have taken advantage of cheap electricity to mine cryptocurrencies. For example, in 2017, Australian miners used cheap electricity from Collie's town to mine Bitcoin. Other reports also told about US companies who use cheap electricity in the rural cities for this exact purpose.


Mining cryptocurrency is not that cost-efficient anymore, though. On the one hand, it is becoming more profitable (due to the price increase of Bitcoin); on the other hand, its energy consumption has increased as well. But, of course, this doesn't necessarily mean that cryptocurrencies are highly unsustainable.

No comments:

Let me know your thoughts on this TechPinas article.