The recent Bitcoin halving has put a spotlight on the popular cryptocurrency—and raised new questions about the environmental footprint of the crypto world.
Mining popular digital currencies demands a tremendous amount of energy, and the reduced supply of Bitcoin will spur operations that are centered on that goal to work even harder. That has environmentalists (and some politicians) worried that crypto’s impact on the climate could grow, just as artificial intelligence is putting an even bigger strain on power grids and extreme weather events push some states to their limits.
What is the carbon footprint of the crypto industry?
Globally, cryptocurrency accounted for about 0.4% of the entire energy consumption in the world in 2022, according to an International Energy Agency report released in January. That’s about the same amount as the Netherlands consumed.
The carbon footprint of Bitcoin miners alone from 2020 to 2021 was equivalent to burning 84 billion pounds of coal or operating 190 natural gas-fired power plants, according to the United Nations. In order to offset that, miners would need to plant 3.9 billion trees. That’s 7% of the Amazon rainforest and would cover an area stretching across Switzerland or Denmark.
Exactly how much energy does crypto mining consume?
According to that same U.N. study, the global Bitcoin mining network consumed 173.42 terawatt hours of electricity in the 2020 to 2021 period. That’s a number too big to grasp on its own, so think of it this way: If Bitcoin were a country, its energy consumption would have ranked 27th in the world, topping Pakistan, which boasts a population of more than 230 million people.
Will the halving have an impact on crypto’s environmental footprint?
Competition for the reduced number of Bitcoin will spur many miners to invest in newer machines, which could result in older ones being relegated to landfills. Typically, the life span of the preferred mining equipment, called an application-specific integrated circuit (ASIC) is five to seven years. But miners could upgrade early to do away with inefficiencies. Bitmain’s Georgia operation, for instance, spent $54 million to import 27,000 of the newest ASIC machines starting last year.
Is there an environmental upside to the halving?
Possibly, but it’s likely minor. Replacing those ASICs will add to landfill waste, but miners will be looking to cut costs—and are likely to lean on sustainable energy to do so. Marathon Digital Holdings, one of the world’s largest Bitcoin mining operations, recently bought a 200-megawatt mining data center near a wind farm in Texas. That led it to forecast a 20% reduction in operational expenditures.
Others could follow suit—but even then, the e-waste generation (which added up to 30.7 metric kilotons in May 2021) will be hard to overcome.
Which countries have the biggest Bitcoin mining operations?
China instituted an official ban on crypto mining in 2021, which resulted in many miners moving to other countries, including the U.S., but underground mining operations continue there. Other countries that are among the top miners, per the U.N., include the U.S., Kazakhstan, Russia, Malaysia, Canada, Germany, Iran, Ireland, and Singapore.
What, if anything, is Washington doing about this?
In late January, the Biden administration announced measures meant to address the energy consumption of the crypto world, with the U.S. Energy Information Administration (EIA) launching a survey of electricity consumption by mining companies. Those companies will be required to offer a detailed look at their energy use.
“We intend to continue to analyze and write about the energy implications of cryptocurrency mining activities in the United States,” said EIA administrator Joe DeCarolis in a statement. “We will specifically focus on how the energy demand for cryptocurrency mining is evolving, identify geographic areas of high growth, and quantify the sources of electricity used to meet cryptocurrency mining demand.”
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