Bitcoin’s price surge above $50,000 is bringing fresh scrutiny to its environmental footprint, and the results suggest that while the market may sustain the cryptocurrency’s exponential increases, the planet may not be able to.
Cambridge University researchers created an online tool that estimates bitcoin electricity consumption, and it not pretty. The Bitcoin Electricity Consumption Index shows that bitcoin consumes about 124 Terawatt-hours per year — about a half-percent of the world’s total consumption and as much as Pakistan’s.
Other estimates are higher. Testimony presented to the U.S. Senate Committee on Energy and Natural Resources in August 2018 claimed that bitcoin mining accounts for 1 percent of the world’s energy consumption, The Balance reported.
“At that rate, Bitcoin would require 14x the world’s total electricity just to process the 1 billion credit card transactions that take place every day,” The Moguldom Nation CEO Jamarlin Martin tweeted. “I think the bubble bitcoin cult would say ‘the planet has to go, for the dough.'”
Most electricity used to mine bitcoin comes from fossil fuels. Bitcoin produces 37 million tons of carbon dioxide a year, about the same amount as Switzerland. It’s also about the same amount of electricity currently offline in Texas that’s creating a humanitarian crisis in one of the worst blackouts in U.S. history, according to Eric Holthaus, founder of The Phoenix. A newsletter about radical change, The Phoenix shares stories from frontline communities and voices enduring the climate emergency.
Bitcoins are mined or created by people around the world connected to the cryptocurrency network. To mine bitcoin, they have to solve the same mathematical puzzle using computers. About every 10 minutes, someone solves a puzzle and is rewarded with some bitcoin. Then a new puzzle is generated, and the whole process starts all over again. The puzzles help to ensure that no one fraudulently edits the global record of all transactions. As a reward, miners occasionally receive small amounts of bitcoin in what is often likened to a lottery.
Entire warehouses full of miners use massive computer servers in China, where most bitcoin is being produced in 2021. China’s subsidized coal-fired power plants produce some of the cheapest energy in the world, according to The Phoenix.
“It’s a not-unlikely coincidence that a huge amount of Bitcoin is mined in Xinjiang province, the same place where Uighur Muslim minorities have been inflicted with horrific human rights abuses mining the very same coal used to create Bitcoin,” Holthaus wrote.
Holthaus compares bitcoin mining to the California Gold Rush craze of 1849.
“Bitcoin is deeply colonial, deeply extractive, and deeply damaging to the environment and marginalized people around the world,” he wrote. “This privileged crypto-colonialism almost exclusively benefits white men and it’s happening at a moment when the escalating climate emergency is causing escalating chaos that better deserves our electricity and our attention.”
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The Bitcoin Electricity Consumption Index suggests that the amount of electricity consumed every year by always-on-but-inactive home devices in the U.S. alone could power the entire bitcoin network for a year, BBC reported.
The price of bitcoin got a huge boost earlier this month after Tesla announced that it had invested $1.5 billion in bitcoin and plans to accept the digital currency as payment. Observers suggest this bitcoin investment clashes with the electric car maker’s hype dreams of a sustainable future.
“Tesla got $1.5 billion in environmental subsidies in 2020, funded by the taxpayer. It turned around and spent $1.5 billion on bitcoin, which is mostly mined with electricity from coal,” said David Gerard, author of “Attack of the 50 Foot Blockchain,” in a BBC report. “Their subsidy needs to be examined.”
Gerard suggested that a carbon tax on cryptocurrencies could be introduced to balance out some of the negative consumption.
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