Why is Bitcoin mining so harmful to the environment?
Bitcoin has enjoyed a new lease of life over the last year, the cryptocurrency’s value booming to a three-year high as the world was brought to a standstill by the coronavirus pandemic, trapping millions of people in their homes.
But its fortunes continue to fluctuate wildly, as illustrated by the coin’s value crashing from £41,155 to £35,007 in 24 hours, according to CoinDesk data, in response to a single tweet from tech entrepreneur Elon Musk declaring that Tesla cars could no longer be paid for in cryptocurrency.
Nevertheless, that’s still a huge climb from the £6,653 it was valued at preceisely a year ago,
The decentralised electronic currency has come a long way since its conception in 2008, when idealistic early adopters, angered by the latest financial crash, saw it as a means of bypassing the crony capitalist institutions that had dropped society into recession through greed and negligence.
Born of the same anti-establishment spirit of “taking back control” that inspired such movements as Anonymous, Occupy and WikiLeaks or the more recent GameStop war on Wall Street short-sellers, Bitcoin’s practical problems and inefficiencies have gradually come to light, from its lack of consumer protection to facilitating crimes like black market trading, money laundering and tax evasion.
Perhaps its most glaring issue is the huge environmental impact of Bitcoin mining, the process by which virtual coins are generated.
Even though Bitcoin is unregulated, it still needs to verify all transactions carried out between traders to keep the playing field honest and does so by leaving the responsibility with “miners”, who effectively act as auditors updating a ledger, an idea originating with the cryptocurrency’s mysterious architect, known only by the pseudonym “Satoshi Nakamoto”.
To do this Industry Industrynumber, one of which is released approximately every 10 minutes, a chase that involves huge quantities of computer processing power as their machines strive to solve complex but arbitrary mathematical equations in the hope of getting there first and being rewarded with a highly lucrative coin.
As the blockchain becomes ever longer, the calculations become ever more complicated, requiring the use of supercomputers to carry out the trial-and-error hunt for the solution.
More than 150 quintillion attempts at guessing the number are now carried every second of the day all around the world, with sprawling aircraft hangars filled with computers working 24-hours a day far from uncommon.
These cryptocurrency farms require vast amounts of electricity to go about their business, given that a single Bitcoin transaction leaves a carbon footprint of 360kg, compared to 500mg from an average Visa transaction, according to Digiconomist founder Alex de Vries.
As such, they are commonly set up in places where power is cheapest, most notably northwestern China’s Xinjiang Province Industry Industrytwo-thirds of the country’s energy use.
Chinese Bitcoin mines are not only reliant on finite fossil fuel resources but their huge electricity usage results in carbon emissions that are said to be accelerating so rapidly, according to one new study, that they will soon exceed the energy consumption of Italy and Saudi Arabia if urgent action is not taken to rein then in.
Unchecked, the annual power consumption of China’s Bitcoin industry is forecast to peak at 297 terawatt-hours (Twh) by 2024, surpassing the carbon emissons output of the Czech Republic and Qatar.