Bitcoin has been heralded as the future of currency. However, using the cryptocurrency comes with a heavy price — pollution. According to a team of researchers at the Technical University of Munich (TUM), Bitcoin usage releases huge amounts of CO2 emissions every year.
Mining Bitcoin takes up a great deal of computing power. As a result, a large amount of electricity is utilized in generating the cryptocurrency. The power required to mine Bitcoin quadrupled last year, triggering a far higher level of emissions. For the study, the researchers looked at IP addresses and hardware data from IPO filings so as to estimate electricity used by the mining process. According to their calculations, the annual electricity consumption of Bitcoin as of November last year was around 46 Twh. Sixty-eight percent of computing power was located in Asia, with Europe and North America accounting for 17 percent and 15 percent respectively.
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The annual carbon footprint of Bitcoin was found to be between 22 and 22.9 megatons, which is close to the yearly emissions of big cities like Las Vegas or Vienna. “Naturally there are bigger factors contributing to climate change. However, the carbon footprint is big enough to make it worth discussing the possibility of regulating cryptocurrency mining in regions where power generation is especially carbon-intensive… To improve the ecological balance, one possibility might be to link more mining farms to additional renewable generating capacity,” Christina Stoll, a researcher involved in the project, said in a statement (Science Daily).
Last November, a team of scientists from the U.S. Department of Energy’s Oak Ridge Institute for Science and Education, published a study that compared energy usage of Bitcoin against traditional assets like gold, platinum, copper, and so on. The scientists concluded that mining Bitcoin consumed 17 megajoules (MJ) of energy on average to create a value of one dollar. In contrast, platinum, gold, and copper only used 7, 5, and 4 MJ respectively. So while mining platinum was energy efficient by about 2.5 times, gold and copper came out to be even more efficient by about 3 to 4 times.
From their study, researchers at the University of Hawaii at Manoa came to the conclusion that global temperatures could rise by as much as 2°C sometime in the next 20 years if Bitcoin mining continues to rise. “Clearly, any further development of cryptocurrencies should critically aim to reduce electricity demand, if the potentially devastating consequences of 2°C of global warming are to be avoided,” Professor Camilo Mora, lead author of the study, said in a statement (Independent).
Asian crackdown on Bitcoin mining
China, faced with huge pollution issues, has taken action against the mining of cryptocurrencies. In April, the National Development and Reform Commission (NDRC) announced a new set of guidelines in which cryptocurrency mining was placed on the list of sectors that need to be immediately eliminated because of their contribution to pollution. Since electricity is cheaper in China compared to the West, many people have set up mining farms to take advantage of the situation. With new restrictions in place, the cryptocurrency mining industry in China will definitely take a hit.
In India, the government has introduced the “Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019,” which proposes a 10-year jail term for people who are caught mining, generating, holding, selling, transferring, disposing of, issuing, or dealing in cryptocurrencies. They are also considering making the holding of cryptocurrencies a non-bailable offense.