What Is Bitcoin Mining’s Impact On The Environment And How Is It Changing?
Bitcoin’s environmental impact is due primarily to the process of bitcoin mining, because it is that process that requires substantial energy use. However, bitcoin mining is not as bad for the environment as the media coverage has made it seem, and its energy use is still substantially lower than the energy use of traditional financial services.
A Focus On Energy Consumption From Bitcoin Mining
Although bitcoin’s high energy consumption has been a subject of discussion for a while, it has recently come into focus even more for a few reasons. First, the crypto bull run of 2021 has seen bitcoin and other cryptocurrencies take center stage in the mainstream media. More people are learning about the crypto space, and with more attention comes more scrutiny as well.
Elon Musk’s Concerns With Bitcoin’s Energy Consumption
Then, in Mid-May 2021, Elon Musk informed the public that Tesla was pausing bitcoin payments for its vehicles over concerns related to bitcoin’s energy consumption, stating on Twitter:
Bitcoin’s “energy usage trend over the past few months is insane.” Musk also made this statement regarding bitcoin and other cryptocurrencies on Twitter:
“We are concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at great cost to the environment.”
Elon Musk is not alone in his concern over bitcoin mining and its energy consumption, as this point has often been raised by environmentalists as well as many of the people who don’t own any cryptocurrencies.
Bill Gates Focuses On The Negative Environmental Impact Of Bitcoin and Bitcoin Mining
In an interview with the New York Times Bill Gates stated that “Bitcoin uses more electricity per transaction than any other method known to mankind.” Later, though, he added that “if it’s green electricity and it’s not crowding out other uses, eventually, you know, maybe that’s ok.”
In order to understand if these claims have merit, one must first understand how bitcoin mining works and why it consumes a lot of energy, how much energy it consumes, what the environmental implications of this are, and what is being done to make bitcoin and bitcoin mining more sustainable.
What Is Bitcoin Mining And How Does It Work?
Bitcoin mining is the process used to enter new bitcoins into circulation. Miners receive bitcoin as a reward for completing the blocks containing verified transactions that are then added to the blockchain. The miner who solves a complex hashing puzzle correctly first receives the Bitcoin reward for the block that is associated with that particular puzzle. This foundation for consensus that is used in the bitcoin ecosystem is known as Proof Of Work.
The puzzle, or problem, involves coming up with a 64 hexadecimal number known as a hash that is less than or equal to the target hash.
The probability that a participant in the block reward challenge will be the miner who solves the puzzle first is related to their portion of the total mining power present on the network. So, in order to be the miner who solves the puzzle first, you need a lot of computing power. To be a successful miner, you need to have a high hash rate. Hash rates are measured in megahashes per second, gigahashes per second, and terahashes per second.
When there is more total computing power being used to solve the puzzle, the difficulty level of mining increases, because total computing power increases signify more mining rigs competing, and when more compete to solve a problem, a solution is found faster. However, bitcoin evaluates mining difficulty every two weeks in order to keep block production at a consistent rate.
More Computing Power Required For Bitcoin Mining Now Than Before
When bitcoin mining first started, it was possible to be competitive when mining for blocks with just a regular computer because the difficulty level was 1, requiring only minimal power. Today, to be competitive, one needs powerful computing equipment like a graphics processing unit (GPU) or application specific integrated circuit (ASIC), because on May 1st 2021, the difficulty level was 20.608 trillion, which was actually down from the all-time high set two weeks prior of 23.581 trillion. That’s a lot of computing power.
How Much Energy Does Bitcoin Mining Consume?
Now we know why bitcoin mining requires so much energy (computing power for mining rigs), but the complaints against bitcoin aren’t about bitcoin mining simply requiring energy, they are about how much energy bitcoin mining requires.
According to the Cambridge Bitcoin Electricity Consumption Index, at the time of writing, the bitcoin network consumed 140.25 TWh (terawatt-hours) per year. A terawatt-hour is a measurement of electricity that represents one trillion watts sustained for one hour.
For comparison, Disney World uses 1 TWh per year, Facebook uses 5 TWh, Google uses 12.2 TWh, and all the data centers in the world besides the ones that mine bitcoin use about 200 TWh. It has also been said that Bitcoin mining uses around the same amount of electricity per year as Switzerland does in total and more than Argentina.
However, a recent report from Galaxy Digital, a cryptocurrency investment firm, found that the traditional banking industry consumes 263.72 TWh per year, almost twice as much as the bitcoin network. The report also claims that gold mining uses up to twice the amount of energy as bitcoin mining.
Bitcoin Mining’s Impact On The Environment
Regardless of how you look at the situation, bitcoin transactions, along with many other man made institutions and innovations, are consuming a lot of energy which has an adverse impact on the environment. Although this has placed a negative focus on the industry, developments are being made toward a more sustainable future for the bitcoin mining process.
CleanSpark’s Bitcoin Mining Operation
CleanSpark Inc. is a diversified energy services and bitcoin mining company focused on solving modern energy challenges. In Mid-May 2021, CleanSpark further increased efficiency at its mining facility that is 95% Carbon-Free. They ordered additional mining rigs to increase the overall hashrate efficiency of their mining operation, getting rid of older, outdated models that consume more energy and produce a lower hashrate. The company is furthering its objective of operating all company-owned facilities at or near carbon neutral.
Bitcoin Mining And Liquid Immersion Cooling
Some bitcoin miners have started to consider technologies like passive two-phase immersion cooling that are starting to be used in other data centers as a possible method to conserve energy and lower their energy consumption footprint. Companies like Bitfury Group, a leading blockchain provider, are leading the way and are already experimenting with immersion cooling in a new data center they built.
Hydroelectric Energy For Bitcoin Mining
The recent Global Cryptoasset Benchmarking Study found that 39% of Proof Of Work mining is powered by renewables, mainly hydroelectric energy. This shows that the trend of clean bitcoin mining is definitely growing.
For example, cryptocurrency miners have reportedly set up in Ciudad Del Este in Paraguay to tap into the inexpensive renewable energy generated by the nearby hydropower plant. Canada is also attracting miners due to inexpensive electricity and cooler climates that help keep energy costs under control.
Perpetual Industries Develops Green Energy Mining Systems
Perpetual Industries is focusing strategically on cryptocurrency mining through the development of a Green Energy Mining (GEM) system. These cryptocurrency mining systems use renewable and surplus energy sources like wind, solar, natural gas, and geothermal sources and utilize battery storage technology.
Bitcoin Mining: Using Renewable Energy Technologies For A More Sustainable Future
It is true that the bitcoin mining process uses a lot of electricity, but through a focus on energy conservation and the use of renewable energy technologies, developments are being made in the field that can greatly reduce any potential harm to the environment.
These developments will place bitcoin mining efforts even further ahead of traditional financial services regarding energy consumption than they already are and could encourage other processes and industries that require a lot of energy but haven’t made sustainability a goal yet to take similar actions. The steps that are being taken to make bitcoin mining more energy-efficient have already placed the cryptocurrency industry among a growing list of industries that are making efforts toward ensuring that the future is more sustainable.
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