Summary:
Bitcoin's value recently topped $100,000.
Bitcoin mining consumes 155-172 terawatt-hours of electricity annually.
Mining operations generate up to 96 million tonnes of CO2 emissions yearly.
The share of renewable energy in Bitcoin mining dropped from 41.6% to 25.1%.
Local residents are actively fighting against the environmental impacts of mining operations.
As Bitcoin reaches new heights seemingly by the day, the cryptocurrency and its industry are under intense scrutiny.
What's Happening?
Bitcoin mining, defined as "the process by which bitcoins are issued and generated," consumes between 155-172 terawatt-hours of electricity annually, accounting for 0.4% of global energy demand. Recently, the value of Bitcoin topped $100,000 for the first time.
The pollution generated by Bitcoin mining is staggering, with estimates suggesting it produces up to 96 million tonnes of CO2 emissions each year, which is a quarter of the pollution produced by France annually.
Jean-Paul Delahaye, a mathematician and emeritus professor, stated, "Bitcoin is based on blockchain technology, which requires computers to perform identical calculations around 15,000 times, leading to high energy costs and environmental waste."
In contrast, Daniel Batten, a Bitcoin analyst and climate investor, argues that the high energy demands of Bitcoin have spurred innovation and investment in clean energy, creating a net benefit. He suggests that crypto operations can make renewable energy farms more profitable, which could lead to increased power generation.
Why Is This Important?
The industry faces criticism not only for its high energy consumption but also for water demands and land usage. A recent study revealed that hundreds of billions of liters of water are required for cooling, and Bitcoin mining operations consume 1,870 square kilometers of land.
Batten disputed claims surrounding Bitcoin's environmental impact, arguing that the 2024 paper that received widespread media attention does not reflect a consensus on Bitcoin mining's effects. The industry has seen a significant shift, with mining operations relocating from China to Kazakhstan and the United States due to energy costs.
The carbon footprint of Bitcoin mining increases with the carbon intensity of a country's electricity supply. Recent data shows a drop in the share of renewable energy used in Bitcoin mining from 41.6% to 25.1% after the move to Kazakhstan.
What's Being Done About Bitcoin Mining?
The Bitcoin industry could potentially reduce its environmental impact by embracing transparency, accepting regulations, and adopting energy-efficient cryptocurrencies. For instance, Ethereum recently announced a 99.95% reduction in energy usage with its proof of stake model.
Local communities are also taking action against mining operations, challenging practices that contradict climate action plans. For example, residents in Memphis, Tennessee, and Fort Worth, Texas, have raised concerns about noise pollution and health impacts from mining facilities.
Governments and corporations are encouraged to utilize excess renewable energy for Bitcoin mining, as demonstrated by a Japanese utility company.
Note: This article has been updated to provide additional commentary and analysis regarding cryptocurrency-related investments in renewable energy in recent years.
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