As bitcoin reaches new heights seemingly by the day, the cryptocurrency and its industry are under the microscope.
What’s happening?
Bitcoin mining — “the process by which bitcoins are issued and generated” — consumes 155-172 terawatt-hours of electricity per year, accounting for 0.4% of global energy demand, Polytechnique Insights reported. On Wednesday, the value of the cryptocurrency topped $100,000 for the first time.
The resulting pollution is as much as 96 million tonnes (over 105 million tons) of carbon dioxide per year, which is a quarter of the pollution produced by France (385 million tonnes — roughly 424 million tons) every 12 months.
“Bitcoin is based on blockchain technology: By definition, computers perform identical calculations (around 15,000 times) to ensure the network’s security,” mathematician and Université de Lille emeritus professor Jean-Paul Delahaye said. “The protocol used for bitcoin has a very high energy cost; it’s an environmental waste.”
Daniel Batten, who describes himself as a bitcoin analyst and climatech investor, has pushed back against that claim, saying that in recent years, the high energy demands for the cryptocurrency have actually driven innovation and investment in clean energy that should end up producing a net benefit. While any renewable energy needs now going toward blockchain operations could in a vacuum be reallocated to the grid and thus it’s not all straightforward, the point Batten and others have made is that crypto operations provide a way to make new renewable energy farms more immediately profitable — and those farms can then in theory continue to proliferate and generate more total power than the needs of the mining operations that help to fund them.
Why is this important?
The industry has also faced criticism for high water demand, the PI article reported, citing a 2024 paper in Cell Reports Sustainability, and for the millions of computers used for mining require infrastructure that effectively eats up vast tracts of land around the world. The former amounts to hundreds of billions of liters of water per year for cooling, and the latter equals 1,870 square kilometers. Both figures relate to 2020-21 data.
Watch now: Industry leaders speak on what gives them hope in the face of climate change
In an email to The Cool Down, Batten disputed those claims, saying the 2024 paper, which attracted media coverage from the likes of the BBC at the time it was first released, “does not represent the consensus view on Bitcoin mining.”
The industry made a big move in 2021, relocating from mostly China, where mining was banned, to Kazakhstan, where coal-powered energy was cheap, and the United States. Kazakhstan became second in the world on hash rate, the rate of computing power dedicated to bitcoin mining, but the operations overloaded the country’s grid, and as MIT Technology Review covered, miners were effectively driven out in 2022 when the government cut them off from the grid.
The move to Kazakhstan showed the kind of opportunism to capitalize on where one could create the most profit with the cheapest energy, in this case coal.
“The more carbon-intensive the country’s electricity mix, the higher bitcoin’s carbon footprint,” Polytechnique Insights stated. “The share of renewable energies powering bitcoin mining has fallen from 41.6% to 25.1% following the massive relocation in 2021.”
Do you worry about air pollution in your town?
All the time
Often
Only sometimes
Never
Click your choice to see results and speak your mind
While operations have since shifted back away from that relocation, it could happen again. This is especially concerning because “even if the relationship is not uniform, the higher the price of bitcoin … the higher the energy consumption will be,” according to the PI article. And with the price of bitcoin at an all-time high, more people could become interested in investing, which will only drive up demand — and potentially those harmful side effects.
“Some scientists are warning of the urgent need for action,” PI reported.
Batten called a suggested relationship between bitcoin price and emissions “speculative” and pointed to data that does show the relationship through 2021 but then levels off by 2022, coinciding with the industry’s general move away from the coal-powered Kazakhstan grid. The University of Cambridge, however, hosts a similar tracker that provides estimates that are roughly double for recent effective carbon emissions, although it does say it makes some assumptions about the energy mix most mining operations use. Either way, it’s clear bitcoin operations still result in millions of tons of net carbon dioxide pollution per year.
In general, there are differing expert perspectives on the future of bitcoin’s energy requirements. Analysts such as Wood Mackenzie’s Ben Hertz-Shargel say the demand is too high for the value provided and poses risks for crashing grids, while others, like Batten and energy services exec Joe Hayden, acknowledge the high energy needs but say those needs will drive the world’s transition to cleaner energy because clean energy is also effectively free and renewable once infrastructure is built to farm it, making it a logical investment choice for maximizing profits where affordable energy is essential.
What’s being done about bitcoin mining?
The outlet noted that the industry could reduce its environmental impact by becoming more transparent and accepting regulation, working to develop energy-saving cryptocurrencies, and using greener blockchain validation protocols — Ethereum recently announced a 99.95% reduction in energy usage with its cryptocurrency ether using “proof of stake.”
Residents are also fighting back against mining operations, speaking out against an operation in Memphis, Tennessee, that flies in the face of the city’s Climate Action Plan, for example. Outside of Fort Worth, Texas, citizens filed a lawsuit alleging noise pollution and negative health impacts of a mining facility.
Governments and corporations can help protect people from such problems, as a Japanese utility company is using excess wind and solar energy to power bitcoin mining.
Editor’s note: This article has been updated to provide additional commentary and analysis regarding cryptocurrency-related investments in renewable energy in recent years.
Join our free newsletter for good news and useful tips, and don’t miss this cool list of easy ways to help yourself while helping the planet.
