Bitcoin Environment Debate
Bitcoin or any other cryptocurrency cannot exist without computers, which in turn need electricity. The crux of the debate around environmental concerns of Bitcoin is that its mining consumes huge amount of electricity.
Bitcoin Mining
Bitcoin mining involves unlocking bitcoins by solving complex and unique puzzles; and adding transaction records to bitcoin’s public ledger of pas transactions aka Blockchain. As the value of bitcoins goes up, the puzzles become more difficult and require more processing power in computers solving them.
The process of Bitcoin mining was kept resource-intensive intentionally and difficult so that the number of blocks found on each day by miners remains steady.
Estimates of Power consumption
As per some estimates, more than half of the processing power used to mine bitcoins is used in China, where electricity comes from burning coal but is subsidized by government.
According to 2015 estimation by The Economist, even if all miners used modern facilities, the combined electricity consumption would be 166.7 megawatts (1.46 terawatt-hours per year). Currently, the global Bitcoin mining activity is estimated to consume between 1 and 4 gigawatts of electricity.
Bitcoin Mining Farms
In some countries where there is relatively cost advantage of electricity, some Bitcoin mining farms have been established. For example, Iceland has abundant geothermal energy and cooing arctic air, many Bitcoin farms have been established there.
Cost Benefit Analysis
It is still debatable whether the benefits of having cryptocurrency like Bitcoin outweigh its environmental costs. It was further speculated that Bitcoin mining is so energy intensive that it may start influencing the world energy markets in 2018. The rise in its prices would put further pressure on demand of coal.
However, so far, no reliable data was available on exact amount of energy consumed by Bitcoin network. Towards this, little authoritative numbers have come from a Cryptocurrency website Digieconomist, which released the Bitcoin Energy Consumption Index in 2017. This index is updated daily. As per data released under Bitcoin Energy Consumption Index, the carbon footprint per transaction of Bitcoin is estimated to be 117.63 kg of CO2, which is equivalent to 127 Pounds of coal burned. This is thought to be an extreme carbon footprint for each unique Bitcoin transaction and is claimed to be unsustainable.
