Summary
- Bitcoin has a real carbon footprint,
with one Bitcoin transaction producing the carbon dioxide
equivalent to more than 1.1 million VISA
transactions. - Bitcoin mining consumes a significant
amount of electricity, which has historically been higher
than the electricity consumption by entire
countries. - It is yet to be seen whether Climate
Change Accord will turn out be a game-changer for the crypto
industry.
The coronavirus era has seen the world
going crypto crazy. The dramatic surge in the value of
Bitcoin amid COVID-19 revived the interest in the
cryptocurrency space. But do you know this magic internet
money leading the crypto bandwagon has a real carbon
footprint?
Citing fossil fuel use in bitcoin mining
and climate concerns, the US automaker Tesla has recently
suspended the use of the digital currency to purchase its
vehicles. This has reignited the discussions on bitcoin’s
environmental concerns, while the digital asset is failing
to maintain the growth momentum.
Shockingly, one
Bitcoin transaction generates the carbon dioxide equivalent
to over 1.1 million VISA transactions or over 88,000 hours
of watching YouTube. In fact, if Bitcoin were a country, its
annualised estimated carbon footprint would be comparable to
Singapore at over 54 million tonnes of carbon dioxide. These
real-time statistics have been provided by the well-known
platform Digiconomist, which is targeted at exposing the
unintended consequences of digital trends, generally from an
economic perspective.
Bitcoin Mining:
Threat to Zero-Emission Future?
The huge
carbon footprint and energy consumption from Bitcoin mining
are posing a significant threat to the world’s
zero-emission future. The amount of electricity that is used
to mine bitcoin has historically been more than the
electricity consumption by entire countries, like Sweden and
Malaysia. As per Cambridge Bitcoin Electricity Consumption
Index, Bitcoin consumes about 148 terawatt-hours (TWh) of
electricity per year, as against Sweden that consumes about
131 TWh per year.
A study from researchers at the
University of Chinese Academy of Sciences released in April
2021 supports this view. The study suggested that Bitcoin
mining in China is so carbon-intensive that it could
potentially undermine worldwide sustainable efforts and can
jeopardise its greenhouse emission reduction
target.
China is becoming a hotspot for carbon
emissions from power-intensive bitcoin mining. Due to
inexpensive electricity, coal-heavy regions of China have
significantly attracted bitcoin miners over recent years.
And these regions are already under the scanner of
regulators for releasing significant carbon dioxide
emissions from fossil-reliant industries.
Also
Read: Bitcoin:
A New Asset Class Or Greatest Bubble Of All
Time?
The exponential rise in the price of
Bitcoin over the last one year has put cryptocurrency on the
map in the investment space. At the same time, the growing
importance of digital currency has bolstered the incentives
to mine and use Bitcoin, increasing the likelihood of
further uptick in carbon emissions. The current scenario,
therefore, calls for execution of some effective measures to
curb emissions via Bitcoin mining, like the imposition of
individual site regulation
policies.
Can Crypto Climate Accord
Erase Bitcoin’s Carbon
Footprint?
Earlier in April 2021, a
coalition of crypto firms and organisations announced an
industry-driven pact, Crypto Climate Accord, which intends
to decarbonise the crypto industry in record time. Under the
pact, the Accord supporters have vowed to enable all of the
world’s blockchains to be powered by 100% renewables by
2025 and eliminate greenhouse gas emissions altogether by
2040.
While the accord has garnered support from some
influential names in the crypto industry, critics condemn
that a self-regulated accord could get in the way of more
useful government policies against crypto’s carbon
problem. Being the largest player in the cryptocurrency
market, Bitcoin is expected to cause the most trouble to the
accord due to the significant amount of energy it
consumes.
Must Read: How
Are NZ Businesses Progressing on Climate Change and
Sustainability?
Having said that, we cannot
neglect that the crypto industry is eyeing a greener future
and is geared up to put decarbonising efforts into action.
The latest global moves testify the growing adoption of
sustainable crypto mining practices. With China’s popular
crypto-mining hotspot Mongolia banning crypto-mining and
Xinjiang likely to follow, China’s miners are turning to
green energy or planning to move overseas.
But whether
these green practices will turn out to be a game-changer for
the crypto industry is yet to be
seen.