A recent survey conducted in 2022 recorded that over 2000 kilowatts/hour of energy per transaction was consumed, which equals the amount of energy a normal household in America uses in approximately 79 days. Mining Bitcoin or any other currency requires loads of power, which ultimately strains the power grids, due to which crypto mining has been considered illegal in many countries, including China.
But there isn’t only one way to mine these tokens. There are many other sustainable yet environment-friendly options that people can explore. Recently a crypto expert tried using hydropower to mine Bitcoin, but his country didn’t permit it. Now that same self-sustainable technology is used by other countries to accumulate tonnes and tonnes of Bitcoin to improve their economic situation.
Firstly, let’s look at the impact crypto mining has on our environment and what steps we can take to solve this issue forever. If you’re unfamiliar with crypto mining, read our guide on how crypto mining works beforehand. As cryptocurrency has become more than a niche topic, it’s time to find solutions to improve our environment. So let’s get into it.
Also read: Blockchain Beyond Cryptocurrency: Real-World Applications
Effects of Crypto Mining on the Environment
High Energy Consumption
The current mechanism that most cryptocurrencies use to mine their tokens is the Proof-of-Work mechanism which is highly energy intensive in nature. Because of its demanding nature, it uses significant energy to add tokens into circulation and validate transactions. This is because the verification process requires the solution of complex mathematical equations.
Bitcoin mining uses up over 200 Terawatt-hour (TWh) of electrical energy each year, which equals the annual energy consumption by countries like Thailand. Even so, as discussed above, one Bitcoin transaction uses up 2,292 kWh of energy, equalling the energy consumption of an American household over 79 days. These are a few facts that show how much energy crypto is using every year.
Countries like the U.S. and Kazakhstan own about 35% and 18% of Bitcoin mining, respectively. These countries use fossil fuels to generate electricity meaning that 53% of the mining is using up the world’s fossil fuels, and this can cause a ripple effect that could dangerously endanger the number of fossil fuels available, thus decreasing the overall energy production.
Cryptocurrency Carbon Footprint
Mining Bitcoin releases over 114 million metric tonnes of carbon dioxide into the atmosphere each year. This is dangerously increasing the level of CO2 in our environment, which causes global warming, pollution, and much more. This is one of the biggest reasons individuals must find a way to mine crypto while saving the environment from such harmful waste.
Electronic Waste (Mining Rigs and Integrated Circuits)
Cryptocurrency mining has a significant consequence in the form of electronic waste. The mining hardware used in the process becomes quickly obsolete, contributing to the growing problem of electronic waste. This is particularly evident with Application Specific Integrated Circuit (ASIC) miners. As newer and more advanced models are introduced, the older ones become less efficient and are often discarded.
According to research conducted by Digiconomist, it is estimated that the Bitcoin network alone generates approximately 38 thousand tonnes of electronic waste every year. This staggering amount underscores the significant environmental impact of cryptocurrency mining and the urgent need to address the issue of electronic waste in this industry.
Alternative Environment-Friendly Ways of Mining Crypto
Proof-of-Stake Mechanism
It is a validation mechanism in which miners utilise their cryptocurrency to acquire mining rights proportionate to their coin holdings. Instead of relying on energy-intensive computations like in Proof-of-Work, miners lock their coins to establish a validator node responsible for verifying transactions. While Proof-of-Stake avoids the energy usage concerns associated with Proof-of-Work, it has faced criticism for inherent inequalities.
The system favours those with larger coin ownership, receiving higher returns. It’s important to note that acquiring the necessary computing power for mining can be costly, even in Proof-of-Work. Currently, there are over 200 coins that operate using Proof-of-Stake, with Solana being the largest among them.
Proof-of-Burn Mechanism
Proof-of-Burn is an innovative hybrid mechanism combining elements of Proof-of-Work and Proof-of-Stake. In this approach, validators voluntarily burn a certain amount of cryptocurrency, permanently removing those coins from circulation. By doing so, validators can acquire a virtual mining rig that operates in proportion to the number of coins burned.
The more coins burned, the faster the mining process becomes. This unique mechanism allows cryptocurrency mining without the massive energy consumption associated with traditional Proof-of-Work. Proof-of-Burn is still a relatively new concept and has not gained widespread adoption. Currently, Slimcoin stands as the only cryptocurrency utilising this mechanism.
Proof-of-Elapsed-Time Mechanism
Proof-of-Elapsed-Time is commonly employed in permissioned blockchains, where the network participants are known and trusted entities. By using a lottery-style selection process based on elapsed time, this consensus mechanism helps maintain the integrity and security of the blockchain network. It offers a different approach to achieving consensus than other algorithms, making it suitable for specific use cases requiring permissioned access.
Proof-of-Capacity Mechanism
Proof-of-Capacity is a distinct mining algorithm that diverges from measuring computational power or stake. Instead, it leverages the available storage space on a mining device’s hard drive for validation. Under this mechanism, potential solutions to the mining algorithm are stored using any vacant space on the mining device.
The more storage capacity a miner possesses, the greater the number of solutions they can store. Consequently, this increases the likelihood of having the correct solution to the algorithm. A few cryptocurrencies have embraced the Proof-of-Capacity system, including Burst, Chia, and Storj.
Using Environment-Friendly Resources (Solar and Water)
To make things more efficient, individuals have started moving towards resources that don’t cause any harm to the environment. Using solar energy and water energy, Bitcoin mining can be done with the same efficiency while eliminating carbon emissions, decreasing energy consumption significantly, and lowering electric waste by many folds. An example of it you’ll find in the form of SolarCoin, which utilises solar energy.
Frequently Asked Questions
Can Bitcoin Ever Become Environmentally Friendly?
In a nutshell, due to the energy-intensive nature of the validation process, its competitive nature, and the rewarding mechanism, it is improbable for Bitcoin to reduce its energy footprint. Even after the final Bitcoin is rewarded, the network will continue to demand significant amounts of electricity for transaction validation.
What Are Some Concerns Expressed by Environmental Activists Regarding Mining Cryptocurrencies?
Environmental activists expressed concerns about the ecological impact of mining, including habitat damage, air and water pollution, and the overall sustainability of mining operations. They call for increased regulation and environmentally responsible practices within the sector.
How Much Energy Is Required for Mining Cryptocurrencies Like Bitcoin?
Mining cryptocurrencies like Bitcoin requires substantial energy due to the complex mathematical equations that must be solved in the blockchain transaction verification process. Estimates suggest that the energy used for Bitcoin mining can be comparable to the energy consumption of nations like Argentina or the Netherlands.