Daily Management Review

Alarming Concerns Or Driving Force Towards Green Energy? – Bitcoin Growth Comes At Environmental Cost


Analysts’ estimates of bitcoin’s energy consumption indicate that the environment, already taxed by climate change, is being over burdened.

Bitcoin is growing at a time when climate change is knocking at our doorstep, whereby giving rise to speculations as well as debates on its environmental effect due to the energy used to “power the virtual currency”.
Economists and environmentalists alike have shown concerns towards the bitcoin mining process as the sustainability grounds remain at it root. Complex calculations are solved by miners through computers for verifying bitcoin transactions. It is here that the use of energy in bitcoin mining is being put under question keeping the “fossil fuel-dependent electricity” in mind for powering computers. As some have estimated that bitcoin’s energy consumption even leaves behind “a small country”.
The attractive bitcoins need to co-exist with computers, while the latter needs energy to run and with the passing days more and more computers are being used in bitcoin mining thus increasing the amount of power consumption directly. With the rising value of bitcoin, the puzzles used for bitcoin mining turn “increasingly more difficult” to solve. As a result, one needs “more computer power to solve them”.
According to some estimates, over 60% of bitcoin mining processing power takes place in China, wherein electricity generation “relies heavily on the burning of coal”. In fact, the government of China has informed that it will put a ban on “bitcoin mining”, for which concerns surrounding energy consumption could be partially responsible.
Fossil fuels are the “largest generator of electricity” throughout the world, while coal contributes significantly to climate change. However, speculations are there that the energy consumption of bitcoin will “continue to rise” along with its growing popularity.
The estimates on energy consumption of bitcoin vary, owing to its use in “intentionally anonymous nature”. Nevertheless, Alex de Vries, a bitcoin analyst operating “Bitcoin Energy Consumption Index” on the “Digiconomist” website produced “alarming” estimates. Therefore, economictimes informs:
“If bitcoin miners are using the most efficient machines possible, the lowest amount of electricity they could possibly be using is 13 terawatt hours, de Vries said in an interview. That's about as much as the entire country of Slovenia. De Vries said less conservative estimates make it entirely possible that bitcoin is using as much energy as Ireland, which consumes about twice as much as Slovenia, or about 0.7 percent of the U.S. total”.
According to Vries, the “problem is getting worse”, as the estimated figured report that the bitcoin’s annual energy consumption increased by “a fifth in the final weeks of 2017”. Contrarily, the Co-Founder of one of Florida’s “Fort Lauderdale”, Oscar Lafarga, thinks that the alarming situation could ignite more interest towards renewable energy. In his words:
“In a way, it could be the driving force for breakthroughs on renewable energy”.
In fact, Iceland’s geothermal abundant green energy besides its “hydroelectric plants” have catalysed mining of bitcoin. However, the extent of environmental footprint created by the bitcoin growth is still under debate. Although, Vries points out that “insane amount of energy” is being used in bitcoin mining, while Marc Bevand, a bitcoin investor thinks that bitcoins efficiency and its existence beyond the grasp of inflation “outweigh the environmental toll”. As he adds:
“We don't have exact data to say how much we are benefiting from bitcoin”.