Cryptocurrencies like Bitcoin have many supporters, but there are also many critics who point to a major flaw. It takes a lot of energy to extract it.
While mining is just one way to authenticate digital currency transactions and mint new cryptocurrencies, there are many more processes involved. Two popular digital currencies, Bitcoin and Atrium, use this method. Continue reading to learn more about Bitcoin energy consumption and its environmental effects.
Bitcoin Mining Problems
After just a few short years, Bitcoin has become the ninth most valuable asset in terms of market value. The unprecedented rise of digital currencies has created countless millionaires and launched a multi-billion dollar industry.
Decentralized technology is inspired by it. However, there were some unforeseen consequences. Argentina now needs almost as much computing power to support the bitcoin infrastructure network as the entire country.
Critics continue to voice concerns about the industry’s environmental impact. Even if bitcoin consumes as much energy as a country, researchers believe it plays a role in pollution, including carbon emissions. The average bitcoin transaction consumes more than 1,700 kilowatt hours of electricity, which is a lot of energy. It is almost twice the average consumption of an American household per month.
Also, some bitcoin mining operations have partnered with fossil fuel power plants to generate electricity. As a result, carbon dioxide emissions are higher due to coal. Over time, the amount of energy used to extract digital currencies will increase. Assuming that both the cost of the product and the number of people using it continue to grow.
As the face value of crypto increases, so do the motivations of new miners. The higher the price of a digital currency, the more energy is expended to set up an encrypted network.
Why is energy necessary to extract digital currency?
Crypto mining consumes a lot of energy, which is an advantage, not a disadvantage. Mining bitcoin or a proof-of-work digital currency consumes a lot of energy, just like extracting physical gold.
This approach makes it impossible for a player with a good budget to control the entire crypto network, but it is not impossible. According to Ramzifa, decentralized currency systems have many advantages over traditional currency systems.
Here’s the reason:
You do not need to trust a central bank or other trusted intermediaries to set up a digital currency network. Without any central reference, miners use a great deal of computing power to execute and manage the security of digital currency networks.
The effects of digital currency extraction on the environment
Calculating the carbon impact of a digital currency is more difficult. Most countries where digital currency mining is predominant use fossil fuels as their primary energy source.
Here’s the reason:
Miners can only find the most economical sources of energy for profit. The most common solution to this problem is to install alternative energy sources.
Experts estimate that the Bitcoin network will emit approximately 114 million tons of carbon dioxide per year based on hash rate data until May 27, 2022. This is equivalent to the output of the Czech Republic.
Bitcoin mining has a negative impact on the environment and most of the miners are in China. This is a country where coal accounts for more than two-thirds of the country’s power. Unfortunately, in 2021, the Chinese government outlawed all digital currency mining, forcing miners to migrate to fossil fuel-dependent countries such as Kazakhstan and the United States.
As mining hardware becomes obsolete, it generates a lot of e-waste. Miner integrated circuit is a clear example of this program. They are special equipment used to extract the most widely used digital currency. The Bitcoin network generates about 35,000 tons of e-waste annually.