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Is Bitcoin Mining Playing Spoilsport With Climate?

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.

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