Is Bitcoin really harmful to the environment?

You read it again and again. Bitcoin is a danger for the environment, because Bitcoin mining consumes as much energy as some smaller countries. But is Bitcoin really bad for the environment? Read on to learn more about Bitcoin's impact on the environment and why Bitcoin isn't really as harmful to the environment as many critics claim.

What is bitcoin mining and why does it take so much energy?

Bitcoin is attacked again and again because Bitcoin mining is energy-intensive. You often read that mining consumes up to 0.6% of the world's electricity. Especially in times of very high energy prices, environmental activists accuse Bitcoin miners of wasting energy. 

To better understand this criticism, you need to know what Bitcoin mining is and what role it plays in the Bitcoin network. 

Essentially, Bitcoin mining is a big dice game in which the person who guesses a certain number the fastest is rewarded. For this effort, you then get a reward in the form of Bitcoin Block Rewards. 

But since not just anyone:r can come along and claim to have the right number, you need a verification system. In the case of Bitcoin, it's the consensus model called Proof of Work (PoW). This ensures that miners prove how they have made efforts in processing transactions.

So the mining computers guess thousands of possible numbers within seconds and the miner who manages to do it within the given time wins. To make sure that the game doesn't get too difficult and that you don't play indefinitely for one round, the Difficulty Adjustment was invented. This analyzes all 2016 blocks to see if you meet the 10 minutes per block rule. Depending on this, the game is made more complex or easier. 

The result of Bitcoin mining is not the waste of energy resources, but the purposeful application of energy to extract a monetary resource. The more effort you put into it, the more secure you make the system.

How environmentally harmful is Bitcoin mining really? That's what the facts say!

Let's take a closer look at the facts surrounding the issue of Bitcoin's environmental impact. According to the University of Cambridge, Bitcoin consumes about 134 TWh annually, or 0.6% of the world's electricity. 

Bitcoin mining consumption

Critics always like to make comparisons with small states. This then leads to statements like: Bitcoin needs more electricity than Chile or you are stealing energy from emerging countries. If you take a closer look, you will see how inappropriate this comparison is. 

On the one hand, we know that more people use Bitcoin than Chile has inhabitants. The application that has more people logically needs more resources. 

Furthermore, it is often emerging countries that have major problems in the energy sector. There is often no functioning network or sufficient sources of energy. This is often simply switched off and not used until there is enough power again. 

You compare a system that is always running with one that is switched on and off. Logically, the on-off system needs less energy.

However, there are countries that have a lot of land with few inhabitants. These are often the energy winners, since they have a surplus per capita. If you look again at the chart above with all the countries, you will find Bitcoin near Sweden and Norway. Both are countries with very low cost energy alternatives. They have also realized that you can use the surplus energy for Bitcoin mining and even make a profit over a longer period of time. More on this in the next section. 

Another point of attack is Bitcoin's carbon emissions. Since so much energy and resources are expended, it must be bad, right? If you look at the following graph, you'll see how little carbon Bitcoin emits in the first place.

According to this chart, you would first have to replace gold mining, air conditioners in every home, the military industrial complex, and aviation. These are the four biggest carbon polluters in the world. 

Bitcoin has increased in output since 2018, but people are already working on alternatives there.

The alternative Bitcoin mining solutions of the future

However, if you take a closer look, you will see that Bitcoin mining is already very environmentally conscious. According to the Bitcoin Mining Council 59.5% of the energy for mining already comes from renewable sources. Most of these are solar, water and wind.

This means that only 40% of the entire Bitcoin mining sector operates according to the classical principle. This number will decrease drastically in the coming years as more and more mining projects are found that are based on these alternative energy resources. 

In Kenya, for example, the Gridless Project already has a mining farm that relies on water as an energy source. This project not only enables another mining site, but also offers the surrounding, often completely remote villages a future with energy and electricity. If you would then introduce a circular economy with Bitcoin one, you have a self-contained ecosystem. All because you convert the energy from falling water and use it to mine Bitcoin. 

Biologists and chemists also see in Bitcoin a future of energy production of methane gas. This is, after all, the emission that causes the oceans to boil. Especially in coal-fired power plants, the dangerous gas is found again and again. It is a waste product and is often burned. This combustion emits enormous amounts of CO2 and heats up the atmosphere. 

Bitcoin miners, however, see this gas as a source of energy. After all, the gas can be converted in a controlled way to generate electricity. The Bitcoin mining company Braiins, for example, uses this conversion to test its products.

But this can also be integrated into the existing economy! Scilling Digital Mining is an example of a company that uses methane gas waste from surrounding farmers to run a mining farm in Ireland. No kilowatt is used by the grid here, but is generated from renewable energy sources.

Even more exciting, however, is the use of volcanoes with geothermal energy. This uses the heat from an active volcano and converts it into electricity. This energy resource is seen as the future, especially on volcanic islands such as El Salvador. 

The most difficult part is converting the heat into electricity. This requires enormously large turbines that are driven by steam. This can be generated from the heat of the volcano. Creating these turbines and centers are the biggest initial cost up front and take time. In the long run, they are effective and offer an alternative to expensive power plants. 

El Salvador itself already uses this technology for 20% of its annual energy consumption. The region is full of volcanoes and can build more and more such energy centers in the future.

If you compare these solutions to the energy system that still exists, you will quickly realize that it is only a matter of time before Bitcoin is mined almost entirely from renewable energy resources .

The more such solutions you put in place over the next 5 years, the greater the potential for Bitcoin to become carbon negative. This would mean recovering excess energy and thus even relieving the grid in the coming decades.

Where is the headwind coming from and why? 

The solution approach to make Bitcoin more environmentally friendly is already here. We have only listed a few examples. What we need now is time. 

However, critics do not want to give this to Bitcoin. The topic around the energy consumption of Bitcoin mining is becoming more and more of an issue in politics. One can also feel a strong headwind from certain organizations at the moment. 

Greenpeace USA has consistently advocated in recent months for Bitcoin to change its code to move from Proof of Work to Proof of Stake. Proof of Stake is a consensus model that is more like the classical financial system, where shareholders with the most votes say what happens. 

This change is more climate-friendly, since less electricity is needed than with Bitcoin. The energy usage may be less in comparison, but the security factors and the level playing field are much worse with Proof of Stake. Which always ends in hacks of platforms, lost tokens or even abandoned blockchain networks. 

Proof of Stake Blockchains (such as Ethereum) bring us a future that so does not change the traditional system, but simply digitizes it and thus does not eliminate the problems that Bitcoin solves. 

The headwinds from environmental activists and politicians who don't quite understand the added value of Bitcoin are sure to increase in the coming years, as we need to work with alternative energy sources, especially in Europe, that will guarantee independence in the long term. 

Bitcoin is an easy scapegoat there, as the non-experienced electorate quickly makes the connection that too much power and energy is being used for an orange internet coin.  

As is often the case, the solution to this problem is education and training of society. It is up to Bitcoin companies and Bitcoiners to highlight and clearly communicate the added value of Bitcoin and the advances in Bitcoin mining with renewable energy so that Bitcoin can no longer be portrayed as an environmental offender. 

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Is Bitcoin harmful to the environment?

The answer to this question is difficult to answer yes or no. It is true that Bitcoin requires more energy than certain countries, but this is focused on creating Bitcoin. 

If you compare Bitcoin to other mining industries, you will quickly see that Bitcoin only emits a portion of the emissions and is more climate friendly in a one-to-one comparison. 

In addition, almost 60% of all Bitcoin mining operations already use renewable means. The trend towards using more climate-friendly solutions is here and will increase in the coming years.

Why does Bitcoin consume so much energy?

To find new blocks according to the proof of work consensus model, a Bitcoin miner must compute an enormous number of number sequences in a very short time using an ASIC (mining computer). This computation is what consumes the most energy. 

Are there already alternative Bitcoin mining solutions?

Yes, they exist! The good thing is, all these solutions can be obtained from renewable energies. 

At the moment, these solutions rely mainly on water, solar, wind, steam, gas recovery, and geothermal approaches using volcanoes. These solutions produce almost no carbon emissions and can be used in remote locations.