Is Bitcoin Bad for the Environment or Not? Opinions Differ, but the Truth Is One

The energy consumption associated with Bitcoin mining is comparable to that of entire countries. This is often seen as one of Bitcoin’s key drawbacks, as its use is detrimental to the environment. However, Bitcoin proponents argue that the situation is more complex and that in some ways it is an environmentally friendly technology. So who is right about this?

Proof of work

The Bitcoin network is protected from spam attacks by a mechanism known as proof of work. The first version of this algorithm was developed by Cynthia Dwork and Moni Naor in 1993, long before Bitcoin existed. The essence of this mechanism is that it is necessary to perform calculations (do “work”) in order to obtain permission to conduct a transaction (originally, to send an email).

Validating transactions requires performing computations to weed out bad actors. The network rewards them with bitcoins that have not been in circulation to incentivize validators. This is how bitcoins are “mined”; that’s why the process of validation is called “mining.”

In the early days of Bitcoin, mining was not resource-intensive. Anyone could do it using a regular computer. However, as demand for Bitcoin increased, mining became more difficult, requiring more and more energy to solve mathematical problems.

Mining is now carried out on an industrial scale. Mining farms occupy vast rooms filled with devices designed solely to solve Bitcoin puzzles as quickly as possible (to solve the puzzle before other miners and get a reward). By 2018, the Bitcoin network's energy consumption had reached levels comparable to Nigeria and Denmark.

Bitcoin's Impact on the Environment

Bitcoin mining processes impact the environment in four main ways:

• Mining creates a carbon footprint
• Mining requires significant amounts of water.
• Mining consumes a huge amount of electricity.
• Mining produces electronic waste

Based on all these factors, Bitcoin has a significant impact on the environment. These data indicate that Bitcoin consumes similar amounts of electricity and water and generates as much hazardous waste as some countries.

While it can be hard to understand what it means when it says Bitcoin uses as much energy as Poland, you can zoom in and see the equivalent impact of each Bitcoin transaction. This paints a much clearer picture. According to Digiconomist, a single Bitcoin transaction consumes over 1,100 kWh (that’s as much as the average American family uses in 38 days), requires 17,500 liters of fresh water (that’s the same volume as a backyard swimming pool), creates over 280 grams of e-waste (more than 1.5 iPhone 12s), while emitting 620 kg of CO2 (that’s the equivalent of 1.3 million VISA transactions or watching 11.7 years of YouTube content).

Statista provides similar estimates. Moreover, gold mining is less harmful to the environment than BTC mining when comparing the amount of BTC and gold with the same value expressed in US dollars. Although exact dates are not associated with these data, the articles seem to rely on information published in 2023 or earlier.

Tesla cited environmental impact as a reason for ending support for Bitcoin payments in 2021, shortly after introducing the feature. Ethereum switched from proof-of-work to the more environmentally friendly proof-of-stake algorithm in 2022.

Read more: Tesla to stop accepting Bitcoin payments due to 'environmental concerns'

Fossil fuels are the primary source of energy for most mining operations. Various sources estimate that fossil fuel use in Bitcoin mining ranges from 50 to 90 percent.

What Bitcoin Proponents Say…

First, the Digital Asset Research Institute denies the accuracy of the data and articles about Bitcoin’s environmental impact. According to the study, a flawed 2018 study suggesting Bitcoin’s high environmental impact was cited thousands of times through 2024. Accurate articles accounted for only 2% of all articles on the topic. The DARI article argues that 2022 marks a shift toward more rigorous coverage of Bitcoin’s environmental impact.

Given that the environmental impact of mining is a major concern, various mining companies have begun to look for ways to improve the eco-friendliness of Bitcoin mining, and their efforts have been successful. Initiatives in the 2020s have shown that companies are using excess power to mine Bitcoin instead of simply wasting that power and the resources it takes to produce it.

A New York bathhouse is mining Bitcoin and using the excess waste energy to heat its pools.

or, in other words, they heat their pools the way it is normally done and monetize the excess energy that is generated as a by-product of this process.

this is clearly carbon… pic.twitter.com/V0VeDwBicy

— Nick Carter (@nic__carter) June 22, 2023

Another way to improve the environmental impact of Bitcoin mining is to rely on

Source: cryptonews.net