Are cryptocurrencies harmful to the environment? Electric car maker Tesla’s decision to not accept Bitcoin as payment has sparked the discussion. Following it, the value of cryptocurrencies plummeted. Looks like, the world is reaching a consensus about the flip sides of the currency.
Studies show that cryptos emit large amounts of carbon. A single transaction of Bitcoin would produce carbon emissions equivalent to 680,000 Visa transactions, or that of 51,210 hours of YouTube usage.
The environmental impact occurs during bitcoin mining or bitcoin manufacturing. Bitcoin mining is the process where new bitcoins are created and then transferred to computers that solve complex algorithms. This will force computers to run the Bitcoin network without a centralised administration. The creation of each bitcoin requires complex mathematical calculations and a large sum of energy. The carbon emissions produced by computers engaged in ‘mining’ are damaging to the environment.
Last March, Bank of America had shared its concerns. It said an investment of one billion dollars in Bitcoin is equivalent to the carbon emissions of 1.2 million petrol cars. Tesla had earlier this year invested $ 1.5 billion in Bitcoin. The bank says that in terms of a dollar deposit, no other human activity is as harmful as a Bitcoin transaction.
The crypto network emits 60 million tons of carbon dioxide these days, which is equal to the total carbon emission by Greece. According to the University of Cambridge, 0.7% of the world’s electricity consumption is used for bitcoin mining. In terms of annual consumption, it is just below Egypt, but higher than Malaysia and Sweden. Consumption has soared in recent months.
Cambridge also opined that the electricity consumed by Bitcoin for a year can be used to operate tea kettles in the UK for the next 33 years.
The energy consumption of Bitcoin is unique to some extent. This is because although all cryptos use energy, Bitcoin‘s unique code requires far more energy than others. TRG data centres say, for each transaction, bitcoin consumes power ten times more than ethereum. Among the major cryptocurrencies, XRP uses the minimum power.
About 75% of bitcoin mining takes place in China. Two-thirds of the country’s electricity generation comes from coal. In other words, the lion’s share of the power needed to generate bitcoin comes from the most serious source of pollution.
Environmental issues are now prioritised like never before. Tesla’s move may provoke businesses and individuals to reconsider using bitcoin. The more we think about global warming, the more habitable this world will be. At least for the coming generations…
