Cryptocurrencies like Bitcoin have a lot of supporters, but there are also a lot of critics who point out a significant flaw. It takes a lot of energy to mine it.
While mining is only one method for verifying cryptocurrency transactions and minting new crypto coins, many more processes exist. The two most popular cryptocurrencies, Bitcoin and Ethereum, employ this method. Continue reading to learn more about how much energy it consumes to mine Bitcoin and its environmental effects.
Bitcoin mining troubles
After only a few short years, Bitcoin has become the ninth most valuable asset by market value. The meteoric rise of cryptocurrency has created countless millionaires and ushered in a new multi-billion dollar industry.
Decentralized technology inspired it. Yet, there have been a few unforeseen outcomes. It now takes nearly as much computing power as Argentina’s entire country to support Bitcoin’s underlying network.
Critics continue to voice their concerns about the industry’s environmental impact. Even though Bitcoin consumes as much energy as a country, researchers believe it contributes to pollution, including carbon emissions. The average Bitcoin transaction consumes over 1,700 kWh of electricity, which is a lot of energy. It’s almost two times as much as the average American household uses in a month.
Also, some Bitcoin mining operations have teamed up with struggling fossil fuel power plants to generate electricity. As a result, there is more carbon dioxide emission because of coal. Over time, the amount of energy used in cryptocurrency mining will rise. Assuming that both the cost of the product and the number of people who use it continue to grow.
As the face value of crypto increases, so do the incentives for new miners to get involved. The higher the price of a cryptocurrency, the more energy to run a crypto network.
Why is energy essential for cryptocurrency mining?
Crypto mining consumes much energy, which is a benefit, not a drawback. Mining for Bitcoin or another proof-of-work cryptocurrency uses a lot of energy, just like mining for physical gold.
The approach makes it expensive but not impossible for a well-funded player to take control of an entire crypto network. Decentralized currency systems have many advantages over traditional currency systems, according to Cryptopolitan.
Here is why:
You don’t need to rely on a central bank or other trusted intermediary to run a cryptocurrency network. With no central authority in place, miners use a large amount of computational power to run and manage the security of cryptocurrency networks.
Effects of mining cryptocurrencies on the environment
The carbon impact of a cryptocurrency is more difficult to calculate. Most countries where mining cryptocurrency is predominant use fossil fuels as their primary energy source.
Here is why:
Miners can only find the most cost-effective energy sources to remain profitable. The most common solution to this problem is to install alternative sources of energy.
Experts estimate the Bitcoin network emits approximately 114 million tons of carbon dioxide per year based on mining hash rate data through May 27, 2022. That is equivalent to the Czech Republic’s output.
Mining Bitcoin negatively influences the environment, and most miners are in China. It’s a country where coal accounts for over two-thirds of the nation’s power. Unfortunately, the Chinese government outlawed all crypto mining in 2021, forcing miners to move to more fossil-fuel-dependent countries such as Kazakhstan and the United States.
As mining hardware becomes obsolete, it generates a large amount of electronic trash. An Application-Specific Integrated Circuit miner is a prime example of it. They are special equipment used to mine the most widely used cryptocurrency. The Bitcoin network generates around 35 thousand tons of electronic garbage every year.