The enormous consumption of electrical energy in the mining of Bitcoin has been a burning issue of debates over the past few years.
Bitcoin was invented in 2008 by Satoshi Nakamoto when the world was going through the dark cloud of the financial crisis. The financial catastrophe in 2007–2008 started due to subprime mortgage lending in the US and eventually, it spread across the world crumbling the global stock exchanges.
Amidst this ambiguous scenario when investors had lost faith in the traditional financial institutions, Bitcoin rose as a shining star for more promising investments and Bitcoin crash game.
Beginning from the mining operations, let’s see how it contributes to environmental deterioration.
Bitcoin Mining is the process in which past transactions are added to Bitcoin’s ledger (Blockchain) to unlock new Bitcoin.
The process of mining requires highly sophisticated equipment, which fetches a high amount of electricity. The mining process explores new blocks and unlocks Bitcoin foe, which they are being rewarded in return. They also get a tiny share of transactional charges. The process of mining consistently runs to balance the network.
Unlike traditional centralized financial institutions like banks, transactions are stored in blocks and the chains are linked through a chain. These chains have peer to peer encrypted connections. The miners within the network have to compete with each other to solve mathematical puzzles to add new blocks containing data. Due to the competition among them, they try to use highly advanced and sophisticated computing equipment for faster process.
To solve the ever-renewed computational algorithms at a faster rate, the mining servers require a tremendous amount of electricity to operate. If the expense of power supply and the overall process goes beyond the profits earned through Bitcoin mining, inflation could occur.
Also, the mining reward is getting decreased every four years, which started from 2008-50 BTC, 2012-25; in 2016, it halved at 12.5 and in 2020, it is expected to be halved around 6.5 BTC.
The miners thus strive for cheaper electricity charges, high-speed internet connection, and inexpensive infrastructure and high-speed servers with the fastest computing power. They also need proper space to store these servers.
Factors affecting the Mining process and its impact on Environment
- The Tremendous Electricity Consumption
- The Carbon Emission
- The Location of the Miners
The tremendous Electricity Consumption
Economic models, as well as the environmental balance, will be jeopardized owing to the current power consumption scenario. Single mining of Bitcoin requires 1.5 kW of electricity that costs approximately $3224 to $ 9000.
Digiconomist has revealed that Bitcoin mining needs around 70 terawatt-hours per year.
1 terawatt = 1 trillion watts of electricity
Shockingly this electricity consumption is far more than the entire consumption of Switzerland or the Czech Republic.
Another research predicts that the current 2.55 gigawatts consumption of the Bitcoin network will increase up to 7.67 gigawatts in the future which is equivalent to Austria (8.2 gigawatts) Ireland (3.1gigawatts).
The Carbon Emission
One of the researches disclosed that in 2018, including the various stages of mining, the entire network consumed 31.3 Terawatt hours of electric energy. This enormous consumption generated 17.3 megatons of Carbon dioxide in 2018.
The location of the miners
The geographical location of the miners matters most when we consider the impacts on the environment. The regions which have renewable energy (fossil fuels) production models have less harmful effects on the environment.
For example, if we consider China where there are a large number of mining operators, it is observed that regions like Mongolia and inner provinces of China release more carbon where they use nonrenewable power generation sources. Regions like Sichuan in China release less amount of carbon as they use renewable resources to generate electricity.
To lower down the environmental hazards, large scale miners have relocated to Network, Pacific North West, and Scandinavia, Georgia, etc.
How can the environmental impact be lowered down?
If the mining machines become more efficient, more renewable energy sources are utilized to generate electricity. If the mining process is repositioned in cooler places where less energy will be consumed to cool the mining servers, the environmental impact can be lessened.
To incur more profits, miners seek cheap electricity regions with loose permissive environments, which affect the interests of local commoners as well with unbalanced energy distribution. So, several regions like Plattsburgh in the US had to ban mining operations.
To avoid the gravity of this situation, governments, local bodies, environmentalists, crypto companies in concurrence with common consumers should initiate to form global policies over the regulatory issue of mining.
Public interests and environmental hazards should deliberately be considered while stabilizing and regulating crypto mining activities.