It is a fact that producing Bitcoin requires using energy. However, there is a debate on how much energy is involved in its mining.
Several times, different means of communication have brought attention to the considerable consumption of electricity by Bitcoin mining processes. This occurred especially after it was published that 98% of Bitcoin drilling platforms will become obsolete before they manage to do anything.
New figures indicate that only one Bitcoin transaction uses the same amount of electricity as a British home for almost two months.
Besides, some people do not even see what the said use of electricity implies as they consider that cryptocurrencies “have no intrinsic value and are useless as a form of exchange.” It should be noted that people like Warren Buffett have been defending this argument.
Ecological Nightmare and Expenditure of Useless Energy?
It is said that cryptocurrencies, such as Bitcoin, can lose their value through fraud or digital manipulation. Those are the general conclusions of the Bank for International Settlements, known as the “Bank of Central Bankers,” based in Switzerland.
While several central banks are examining the possible use of Blockchain technology for payment systems, they have not yet issued their state-controlled cryptocurrencies.
Bitcoin Energy Use in Figures
According to a study conducted by Digiconomist, founded by Alex De Vries, the amount of energy needed to mine cryptocurrencies has soared. To be more exact, it has reached an annual high of 77.78 terawatts per hour (TWh), just like all the electricity consumed in Chile.
To make it easier to understand, the report highlights that the carbon footprint of a single Bitcoin transaction is the same as that of 780,650 Visa transactions or that of spending 52,043 hours watching YouTube.
Apart from the estimates of energy consumption, critics such as Robert Sharratt and the firm CoinShares have strongly questioned the resulting environmental impact (in the form of a carbon footprint).
Specifically, Sharratt used the Coinshares report to argue that the network has a limited environmental impact. Interestingly, the Coinshares mining report only implies that the network has a limited environmental impact. The reason for this is a large proportion of the use of renewable energy, but without the words “carbon footprint” at all.
This omission is important as it ignores that the main energy source in Sichuan (China) comes from coal. This is relevant since this is where miners are primarily located, according to CoinShares.
Additionally, the Technical University of Munich (TUM) conducted an independent study on the environmental impact of the network. Therefore, it concluded that “coal is feeding Bitcoin.” Its weighted emission factor for the entire Bitcoin network is the same as that used to calculate the carbon footprint of the network, based on the Bitcoin Energy Consumption Index.
Certainly, Bitcoin mining is not by far the worst economic activity for the environment. However, all these studies reflect a reality that developers can work through innovation. The challenge for the future of Bitcoin lies in the fact that miners manage to improve their access to renewable energy. In the same way, the objective is to make their mining machines even more efficient.
By Willmen Blanco