Is Bitcoin Really That Bad For The Environment?

Since cryptocurrencies now affect the global economic market, and society has stopped running from them, haters of this sphere become active. Recently, it has become popular to accuse the crypto industry of having an awful effect on the environment.

Are these accusations true, or do opinion leaders and the media exaggerate? Let's figure this out in the material.

New Environmental Weapon?

Questions about the environmental friendliness of the cryptocurrency business appeared 2 years ago. In January 2021, English programmer Stephen Deal compared the mining industry with Chernobyl and called it dangerous not only for the global ecology but also for the economy.

This provocative post immediately drew public attention.

In June 2021, the Central Bank of Sweden proposed to ban all cryptocurrencies that are using Proof-of-Work (PoW) technology in the report "Cryptocurrencies and their impact on the financial constitution".

The Riksbank calculated that the energy consumption of mining is equivalent to the work of 200,000 households.

In December 2021, US Senate Banking Committee member Elizabeth Warren requested a report on the activities of the New York mining company Greenidge Generation.

The senator calculated that electricity consumption of Bitcoin mining is "comparable to that of Denmark, Chile, Argentina and the state of Washington."

The pollution can be compared to "emissions from 50,000 cars".

Trinity College Dublin professor Brian Lucy once called Bitcoin a "dirty currency" and a "dirty business": "Bitcoin alone consumes as much electricity as a medium-sized European country".

Tesla vs Bitcoin

World famous influencer Elon Musk also made a few comments on the eco-friendliness of Bitcoin. In May 2021, Tesla, which previously actively supported the crypto industry and the idea of economic decentralization, suspended the sale of its products for Bitcoin.

Musk justified this decision by saying that the crypto business began to gain momentum too actively, and the amount of fuel that goes into Bitcoin mining and transactions exceeds a safe environmental minimum.

Tesla in this matter was immediately supported by the leader of the environmental market, Greenpeace.

Activists noted that their policy of accepting donations in the form of cryptocurrencies introduced in 2014 turned out to be unreasonable due to the increase in the amount of wasted energy.

Bitcoin VS Ethereum: The Fight for the Environment

Vitalik Buterin, the founder of Ethereum, did not remain aloof from the attacks on Bitcoin because of its eco-unawareness.

Buterin, in his interview with CNN, noted that the world's first cryptocurrency needs to develop its technological base as soon as possible in order to increase energy efficiency.

As we know, the main competitor of Bitcoin, Ethereum, has switched Proof-of-Stake (PoS) algorithm, which can significantly reduce energy consumption.

Empty Accusations

However, not everyone is so much against Bitcoin, there are also those who defend it from the accusations. For example, Coin Metrics co-founder Nic Carter disagrees with the popular opinion that Bitcoin is “inefficient.”

He notes that Bitcoin transactions can be used for any of the third-party networks like the Lightning Network, the Liquid and Rootstock, or Blockstack sidechains.

A Galaxy Digital study states that Bitcoin miners spend an average of 113.89 TWh of electricity annually. Mining and production of gold require 240.61 TWh, while the banking sector uses about 263.72 TWh.

Obviously, the cryptocurrency business in this rating of needed energy takes the last place. Of course, the report mentions that Bitcoin mining consumes a significant amount of energy, but that is what makes the network so convenient and secure.

Conclusion

Experts have identified the main prospects for the development of a crypto-mining system in order to reduce the energy consumption of Bitcoin. Miners need to look for alternative cheap energy resources. In China, the practice of so-called nomadic mining is widespread.

Companies move freely between regions, adjusting to environmental conditions in search of natural energy sources. For example, during the rainy season, the southern provinces, where hydropower is developed, are the most attractive for them.

It’s possible to work with renewable energy sources. According to various analysts, 40 to 70 percent of the energy used by miners in the world comes from renewable sources like the sun and wind.

Since many crypto entrepreneurs are still concerned about the negative impact of mining on the environment, developers want to make the cryptocurrency sector "environmentally friendly" by 2030. Such conditions were stated in the Crypto Climate Accord initiative.