Bitcoin Power Consumption Is Leading To Massive Carbon Footprint

If you have invested in Bitcoin, then its soaring prices might be making you happy. However, if you are an environmentalist, then bitcoin is as bad as any fossil fuel or aforestation, as the carbon footprint created by Bitcoin is as massive as the carbon footprint of New Zealand.

According to researchers, Bitcoin is now consuming more electricity than the electricity consumption of the Netherlands and Cambridge University. Bitcoin's carbon footprint is similar to New Zealand, which produces 36.95 megatons of CO2 per year. According to Digonomist, Bitcoin consumes 77.78 TWh annually, which is equivalent to that of Chile's power consumption.

According to a report published by Cambridge University, using the tool Cambridge Bitcoin Electricity Consumption Index, the power consumption of bitcoin is much higher than the report from Digonomist and is said to consume 110.53 TWh of power per year, surpassing the power consumption of Netherland. It is also said that Bitcoin alone consumes around 0.5 percent of global electricity.

Why This Massive Power Consumption?

As we already know, Bitcoin is a digital currency with no physical entity. The entire Bitcoin is stored digitally across the world in various servers. Unlike most currencies, there are no central governing authorities that control Bitcoin and are stored in various computers and data centers using Blockchain technology.

You can either buy a Bitcoin using various cryptocurrency exchange platforms else you can mine them, which requires massive computers with powerful GPUs that consume a lot of power. So, to mine a Bitcoin, one has to solve (done by the computer) a complex hashing algorithm, and as a reward or proof of work, one will get paid in Bitcoin.

As the value of Bitcoin increases, the carbon footprint of Bitcoin is also expected to go up and it is a vicious cycle for the environment for sure. And this 'proof of work' mechanism is the main reason for the massive power consumption of Bitcoin, not the regular transactions.

Do note that China houses the majority of Bitcoin mining facilities, where the country still depends on coal to produce electricity for the most part. As we depend on more digital services, we are bound to increase carbon footprint, unless the electricity is harnessed using renewable sources.

Source