Almost anything these days is a cause of climate change. Well, that’s the cost of civilisation. Now we are talking about cryptocurrency. As ‘the poster boy’ of digital currencies, Bitcoin’s excessive rise in value has attracted global consciousness; not only for the profit but for the enormous amount of energy it takes to mine Bitcoin. The same way almost all human activities contribute to global warming so does bitcoin mining.
With the massive rise in Bitcoin price in 2017 from $1000 to about $20,000, a lot of individuals resorted to cryptocurrency mining, to share in the rewards of mining, neglecting the excessive electricity demands of mining.
Statistics on electricity consumption of Bitcoin mining
According to statistics as revealed by the well-known cryptocurrency analyst, Alex de Vries, to mine a single Bitcoin, miners use an average of 24 terawatt-hours of electricity annually. Well, that’s way more than the annual power usage of Nigeria, with a population of over 195 million. To mine Bitcoin, you will need high-powered rigs that consume huge amounts of electricity by solving complex mathematical problems. Depending on how the mining electricity is generated, it can add pollutants into the air and contribute to global warming.
An estimate of 215 kilowatt-hours for a single Bitcoin transaction has been confirmed, not neglecting the fact that there are over 300, 000 bitcoin transactions going on every single day, all over the world. With the average American household consuming 901 kWh per month, you can say that Bitcoin uses about the same amount of energy for a single transaction that an average American household does in a week. Apparently, Bitcoin miners use way too much electricity that could provide power to about 2.3 million households in America.
A transaction consumes about 100 kWh, while in contrast, a credit card transaction consumes about 0.2 kWh. However, the traditional financial system has its’ own pre-existing environmental costs. After all, central banks, commercial banks, armoured cars, automated-teller machines, are needed, and the central bank does not magically distribute money to everyone at their doorsteps.
Attempts to make cryptocurrency mining more environmentally-friendly
Nadine Damblon, the chief executive of “HydroMiner”, a mining firm in the Austrian Alps, believes that Hydroelectric power is one of the most environmentally friendly ways to generate power and is a market that will help solve the energy problem.
Studies from the Cambridge Centre of Alternative Finance have shown that almost three-quarters of mining zones are in the United States and China, although the likes of Austria and Iceland are picking up speed while providing clean hydroelectric power, as well as cold temperatures that cover for cooling equipment.
It is noteworthy that the mining sector that previously seemed to be a bedroom nerd affair has evolved into a professional and capital-intensive industry with its value chain.
Living in a period where climate change highly converses, the mass carbon emission as a result of cryptocurrency is a topic worth the scrutiny.