The mining of Bitcoin in 2017 alone caused emissions of 69 million tons of carbon. This is almost 2% of the carbon emitted bythe entire European Union. A blockchain transaction consumes as much electricity as an entire household in a week – and there are over 300,000 such transactions each day. The energy for this, in turn, is often obtained from fossil fuels. This leads to a devastating CO2 balance. According to a study by the University of Hawaii at Manoa, if Bitcoin continues to be used as it is now, it could generate enough emissions to raise global temperatures to 2 degrees Celsius by 2033 – an ecological disaster.
Why does Bitcoin consume so much energy?
Dollars, euros and other currencies are printed, but where does Bitcoin come from? Bitcoin is a decentralized digital currency thatis generated by “mining.” In the case of Bitcoin, the concept behind it is called “proof of work.” Graphics cards are particularly suitable for this because they can “calculate” faster than other processors. However, if a graphics card generates Bitcoin under full load, it consumes electricity. A lot of electricity. According to the New York Times, Bitcoin mining consumes about 91 terawatt hours annually. This is more than the annual electricity consumption of the whole of Finland – a country of 5.5 million inhabitants. That’s almost 0.5% of total global electricity consumption and a 10-fold increase compared to just five years ago. It’s an irrefutable fact that more and more coins are being mined: there were just 11 million bitcoins in 2013 and now there are 17 million in total in 2018.
Green Cryptocurrency? Proof of Stake
Some experts are already predicting the demise of Bitcoin due to its environmental cost. Elon Musk triggered a storm of indignation in 2021 when he stopped accepting Bitcoin as a means of payment at Tesla. Professor Roger Wattenhofer from ETH Zurich is also critical of Bitcoin. His opinion: “It is difficult to accept that there are restrictions in so many places with regard to climate change and at the same time the immense and very likely further increasing energy demand of Bitcoin,” says the Swiss information technologist.
An alternative is the “Proof of Stake Concept.” Here, complicated computing tasks are not solved as with Bitcoin and coins are not produced by mining. Instead, the blockchain works in such a way that old coins generate new ones – to put it very simply. This is good for the climate: the energy costs are much lower with the “Proof of Stake.” The popular cryptocurrency Nano produces 0.000112 transaction costs in kilowatts per hour – Bitcoin, on the other hand, produces 1.544: that’s over 7,000% more.
Here is a small overview: Cryptocurrency by transaction costs in kilowatts per hour (KWh)
Proof of Stake Coins
- Nano 0.000112 kWh
- Cardano 0.5479 kWh
- Stellar 0.00003 kWh
Proof of Work Coins
- Ethereum 62.56 kWh
- Bitcoin 1,544 kWh
Depending on the process, there can be huge differences in power consumption.
Conclusion – is there a sustainable future for cryptocurrency?
Bitcoin’s energy balance is disastrous. The concept of proof of work is to blame. Through proof of stake, on the other hand, cryptocurrencies can massively reduce their power consumption. Nevertheless, cryptocurrencies will continue to need electricity in the future. Cryptocurrencies can only be CO2-neutral if they obtain their electricity from renewable energy sources. Fossil fuels are completely unsuitable as an energy source.
At ForTomorrow, we help to drive the energy transition forward and want to make the EU climate-neutral by 2040. We want toenable everyone to compensate their CO2 footprint. Join us and become part of our climate community.
Sources and Further Information:
Egiyi, Modesta Amaka. Ofoegbu, Grace Nyereugwu. (2020, 03. March). Cryptocurrency and Climate Change: An Overview. International Journal of Mechanical Engineering and Technology. (IJMET). [accessed on 25.04.2022].
Kim, E. (2021, 07. September). Bitcoin mining consumes 0.5% of all electricity used globally and 7 times Google’s total usage, new report says. Business Insider. [accessed on 25.04.2022].
Stein, A. (2022, 07. April). Die unangenehme Nebenwirkung von Bitcoins. Die Welt. [accessed on 25.04.2022].
Schiller, K. (2021, 31. March). Proof of Work und Proof of Stake erklärt. Blockchainwelt. [accessed on 25.04.2022].
Maksimenka, I. (2021, 25. August). Grüne Coins: Top 9 Umweltfreundliche Kryptowährungen. beincrypto. [accessed on 25.04.2022].
RND/dpa. (2022, 09. April). Wieso die Kryptowährung Bitcoin ein Problem für das Klima ist. RND. [accessed on 25.04.2022].