This year has been an incredible one for Bitcoin. It’s popularity and price skyrocketed, but that has brought to light an interesting issue.
Namely, the consumption of electricity has soared along with this cryptocurrency’s value. Estimates from Digiconomist show that at a Bitcoin price of $8,000, miners need to consume over 25 terawatt-hours of electricity each year if they want to dig up new bitcoins. That is in the range of what a country of 150 million people uses.
The average electricity consumed comes up to more than 200 Kilowatt-hours for every transaction on this cryptocurrency network. If we take a typical US home which spends 900 KWh every month, then every transaction of Bitcoin is enough to power a house and all appliances close to seven days. Thinking of Bitcoin transfers in these terms helps brings us closer to the real numbers behind energy consumption. We can then learn how much electricity goes into the value of every Bitcoin. Its ever-growing price drives power consumption up, which has been much higher in comparison to consumption of more traditional online payment services for a few years now. With such high usage, the problem of carbon emissions comes into play.
Although there are no exact numbers, we can take a look at data from a Bitcoin mining operation based in Mongolia that uses coal power exclusively. It produces around 14,000 kg of carbon dioxide emissions for every coin it digs up. Converted to hours, that 23,000 to 42,000 kg of harmful CO2 gasses. There are estimates for car emissions in Europe which state that an average car puts out around 0.10 kg of carbon dioxide for each km it is used. In other words, the Mongolian-based mining plant sends the same amount of CO2 into the atmosphere every hour as would 200,000 km driven in a run of the mill car. With the price increase of Bitcoin, we will also see an increase in emission, as miners will need to spend more computing power for every new token added into circulation. Blockchain technology that is at the core of cryptocurrencies like Bitcoin is an inefficient one.
For this decentralized digital currency to work, users simply have to spend an incredible amount of energy. Some developers have proposed solutions that could make the transactions run faster, but these improvements would have to speed up transfers thousands of times if Bitcoin wants to compete with a typical credit card payment system. When you take into account the global changes in climate our planet has been experiencing, we should be asking ourselves what kind of effect digital currencies have on the environment. With so many severe floods, droughts, heat-waves, and wildfires, our goal should be to find ways of bringing down CO2 emissions. After all, what good is revolutionary technology if we lose our planet to it?Only time will tell whether the majority of transfers will have to avoid entities like banks which work with an incredible level of efficiency when compared to the decentralized system Bitcoin uses.
Right now, most people don’t have a need to bypass credit card companies and banks. However, we cannot deny that Bitcoin and its competitors are gaining traction and becoming more and more interesting to the general public.
