Is Bitcoin Good For the Environment?
Generally, cryptocurrency and bitcoin mining are known to be highly energy intensive. The reason is that bitcoin is created through proof of work (PoW) and uses much power compared to other digital currencies. Bitcoin mining is how new bitcoins are released into circulation and how miners confirm recent user transactions. Although mining is considered costly and precise, it offers miners and investors beneficial rewards such as earning cryptocurrency without paying for it. These rewards have encouraged many to go into mining without knowing or understanding the effects of bitcoin, especially the environmental impacts of bitcoin.
Environmental impacts of bitcoin mining
As of 2022, bitcoin mining will account for 0.1% of global greenhouse gas emissions as the energy needed to run bitcoin is large. Bitcoins are an accessible and transparent digital currency. Although it may be helpful to people, it isn’t entirely beneficial for the environment because of the problems its mining produces. Bitcoin negatively influences the environment because of its high energy usage, vast greenhouse gas emissions, water issues, and electronic waste. Bitcoin mining is responsible for more than 57 million tons of carbon dioxide yearly. These greenhouse gases are produced by power plants that use electricity generated from fossil fuels or by gas or coal (like in Iran). When burnt, they emit toxicants that could cause air pollution and affect the environment.
Due to the reliance on ASIC systems, which require a lot of energy, bitcoin mining and its computers utilize a lot of electricity. This extra energy could be harmful to the ecosystems.
Also, bitcoin’s production of electronic waste and water-related problems negatively affects the environment. The power plants that power the bitcoin network take and discharge large amounts of water from water sources to help keep them cool, endangering aquatic life. Additionally, the bitcoin mining equipment’s short lifespan results in waste when rendered unusable.
How to reduce the environmental impacts of bitcoin mining
Bitcoin mining entities can consider three ways to lessen the harmful effects of bitcoin mining on the environment. The first is the conversion of fossil fuels to renewable energy sources in mining centres. It entails transitioning to environmentally friendly energy sources like water, wind or solar. This transition can reduce excess carbon emissions, lowering the effects on the ecosystem.
A second way is leveraging the climate of mining centres. Colder climates don’t require as many artificial cooling systems to keep bitcoin servers from overheating. Hence, they can use less energy and can be prioritized for mining.
The third way is by encouraging the mining of other cryptocurrencies that do not require PoW protocol or mining. For example, mining is not required by Binance Coin, the third biggest crypto by market cap. According to the Greenpeace campaign, a simple change in bitcoins software code can drastically reduce the energy required to use or create it.
Bitcoin is unlikely to minimize its energy footprint because mining bitcoin requires a lot of energy and has a rewards system. The financial sector has continuously witnessed bitcoin’s beneficial effects, which could be why environmental issues brought by bitcoin mining still need to be fully addressed. However, the crypto and bitcoin space can attain energy efficiency with innovation and conscious choices.