For individuals who seek innovation or a new way to generate money, coin mining may appear to be an intriguing but benign new technology.
Therefore, it is only wise to evaluate the environmental impact of cryptocurrencies, and the technologies are far from harmless.
Cryptocurrency is a virtual currency marketed as a solution to eliminate all costs borne by money users and suppliers while putting control in the hands of the people.
However, coin mining requires energy, technology, the internet, and a worldwide networking infrastructure.
As a result, it has a significant environmental impact, with some networks consuming as much energy as small countries to run a blockchain. There are also issues about cryptocurrency’s water and waste footprint.
Continue reading to learn more about how crypto coin mining affects the environment.
Coin Mining Energy Consumption
There is no direct way to calculate the energy used for coin mining. However, it can be estimated based on the network’s hashrate and the consumption of commercially available mining rigs.
For example, the Cambridge Bitcoin Electricity Consumption (CBEC) Index estimates that Bitcoin, the most widely-mined cryptocurrency network, consumes an estimated 151 terawatt-hours (TWh) of electricity per year (0.59% of global electricity use)—more than Ukraine, according to the most recent country energy estimates from 2022.
Another estimate from Digiconomist, a crypto analytics website, put the total at around 98 terawatt-hours.
This amounted to around 435.61 kilowatt-hours of electricity each transaction, equivalent to the amount of power consumed by the average American household over 15 days.
CBEC estimates that Ethereum, the second-largest cryptocurrency network, consumes approximately 5.52 gigawatt-hours, whereas Digiconomist reports that the blockchain consumes approximately 0.85 watt-hours for each transaction.
The energy needed by crypto coin mining is anticipated to fluctuate over time, assuming prices and user acceptance change.
Crypto coin mining is a competitive process: as the value of the block reward increases, so do the incentives to start mining.
Higher cryptocurrency values result in increased energy required by crypto networks as more people join mining networks to profit from the rises.
Why Crypto Coin Mining Requires Energy
The energy intensity of crypto coin mining is a feature, not a flaw. Coin mining is an automated process that validates crypto transactions without the involvement of trusted third parties such as banks.
The way the transaction validation procedure is built consumes a lot of energy—the network relies on the computational capacity of thousands of computers.
This dependence ensures the security of cryptocurrency blockchains based on proof-of-work consensus.
However, it is essential to note that not all cryptocurrencies operate on a system that requires much energy.
Ethereum, Solana, and many other projects use a system that uses relatively little energy; thus, their environmental impact is negligible compared to the impact already made by the global networking infrastructure and its daily use.
How Crypto Mining Works
To comprehend the environmental impact of cryptocurrency mining, specifically coin mining, we must first understand what cryptocurrency is and how the mining process works.
A cryptocurrency like Bitcoin is a decentralized digital money that allows for international transactions, micropayments, and peer-to-peer transactions.
Some businesses and individuals accept cryptocurrencies as payment for goods and services, which has advantages and disadvantages.
The fundamental technology is based on blockchain, a digital record-keeping system available at numerous locations, known as nodes, throughout the network.
Cryptocurrencies like Bitcoin do not rely on a central authority to monitor or control transactions. Instead, they utilize complicated encryption techniques known as crypto mining to safeguard and authenticate transactions while maintaining the generation of new units.
The environmental impact of crypto coin mining, particularly Bitcoin mining, is primarily due to the primary crypto coin mining approach used, proof of work (PoW).
Miners use complex algorithms and energy-intensive hardware and software to confirm transactions, necessitating huge computer power.
Miners compete to solve Bitcoin’s PoW method by solving an encrypted puzzle within each block. The miners utilize sophisticated software to solve the mathematical riddle by trial and error, guessing until they correct it.
Bitcoin miners are paid a set amount for solving these problems, basically paying to conduct the validation work that powers the entire system.
The PoW structure encourages miners with the most potent computers since they can make more attempts in a shorter period, increasing their chances of solving the problem and earning bitcoin as a reward.
A less popular crypto coin mining method is also in use. Proof of stake (PoS) takes substantially less energy and computational power than the PoW approach, owing to the limited number of participants.
PoS indicates that the miner must make a minimum deposit or stake to authenticate the transaction.
How Does Coin Mining Affect the Environment
Sustainability groups, certain government officials, and corporate leaders have criticized the crypto coin mining process for its high energy consumption, greenhouse gas emissions, and extensive hardware requirements.
Cryptocurrencies emit emissions and have other environmental implications throughout their manufacturing supply chain and during disposal, resulting in e-waste at the end of their life.
“Proof of work is a huge competition across computers, and that race to find a solution takes a lot of power,” said Marc Lijour, CEO of Creative Emergy and an IEEE member. “It’s very inefficient.”
The Cambridge Bitcoin Electricity Consumption Index (CBECI) compares crypto’s energy requirements to other activities, revealing that crypto uses roughly as much energy as powering all of the lights and televisions in the United States.
Coin mining is in 58 countries, with most miners in the United States. According to CBECI data, the United States has the world’s most energy-intensive bitcoin mining activity, at 37.84%.
However, the technology’s environmental influence extends far beyond U.S. borders.
According to a report published in Earth’s Future, Bitcoin’s global electricity usage of 173.42 TWh from 2020 to 2021 exceeds that of several countries.
For example, the quantity of power is greater than the combined electrical consumption of Argentina and the Philippines.
This high energy produces large amounts of greenhouse gasses.
According to the analysis, coin mining procedures created 85.89 MTCO2E (metric tons of carbon dioxide equivalent) between 2020 and 2021.
According to the US EPA’s Greenhouse Gas Equivalencies Calculator, this quantity equals 9,665 gallons of gasoline consumed by passenger vehicles or 96,210 pounds of coal burned annually.
The environmental impact of coin mining has raised worries among environmental groups, governments, and business executives, who wonder how to mitigate its effects.
There are around 10,000 cryptocurrencies in circulation, but Bitcoin is the most well-known. According to 2021 research from cryptocurrency exchange Gemini, 95% of cryptocurrency owners and those considering ownership have heard of Bitcoin.
Bitcoin is the First in Destroying the Planet
According to the White House Office of Science and Technology Policy’s September 2022 paper “Climate and Energy Implications of Crypto-Assets in the United States,” Bitcoin uses more energy than all other cryptocurrencies combined.
According to the estimate, bitcoin accounts for 60% to 77% of worldwide crypto-asset electricity demand in 2022. The Ethereum network was the second most active user, accounting for 20% to 39%.
Bitcoin’s energy consumption is primarily dependent on nonrenewable sources.
According to CBECI data, 62% of the electricity utilized for bitcoin mining globally in 2022 was generated by fossil fuels, with coal being the most significant single source.
Renewable energy supplies continue to be insufficient to meet Bitcoin’s energy demands.
According to CBECI data, renewables provided 26% of the electricity used in Bitcoin mining, with nuclear energy accounting for the remaining 12%.
As a result, bitcoin’s electricity usage generates considerable greenhouse gas emissions.
Climate Watch, a digital platform administered by the World Resources Institute, a nonprofit organization based in Washington, D.C., estimates that Bitcoin’s greenhouse gas emissions will be around 68.02 MTCO2E in 2022.
Climate Watch estimates that Singapore’s greenhouse gas emissions will be around 67.3 MTCO2E in 2022. Belarus’ greenhouse gas emissions were anticipated at 65.3 MTCO2E in 2022.
Although Bitcoin’s energy usage and corresponding greenhouse gas emissions are the most scrutinized, scientists say it has significant environmental implications.
“There are issues of concern beyond energy consumption,” said David Boswell, senior director of community architecture at the Linux Foundation, a San Francisco-based nonprofit group.
To begin, Bitcoin mining generates massive heat from the participating nodes. Manufacturing and disposal technology designed for bitcoin mining is also a significant problem.
“Bitcoin miners cycle through a growing amount of short-lived hardware that could exacerbate the growth in global electronic waste,” said Alex de Vries, founder of Digiconomist, and Christian Stoll, a research affiliate at the Center for Energy Markets of the Technical University of Munich, in their September 2021 article “Bitcoin’s growing e-waste problem” published in the academic journal Resources, Conservation, and Recycling.
“E-waste represents a growing threat to our environment, from toxic chemicals and heavy metals leaching into soils to air and water pollutions caused by improper recycling.”
According to de Vries and Stoll, Bitcoin’s e-waste totals 30.7 metric kilotons per year, comparable to the amount of I.T. and telecommunications equipment trash produced in the Netherlands.
The quantity of e-waste produced by Bitcoin mining alone may exceed current global estimates.
Bitcoin’s annual e-waste “may grow beyond 64.4 metric kilotons,” while global e-waste is anticipated to increase by 70% between 2016 and 2050, according to de Vries and Stoll.
Summary
Coin mining consumes a significant amount of energy and generates additional electronic garbage.
Proponents argue that it is justifiable because virtual currencies provide financial systems to millions of people who do not have access to loans, banks, or other services.
Some opponents argue that cryptocurrency wastes energy because it has no value. Others believe that cryptocurrency only benefits those who can afford expensive mining equipment and high market prices, primarily enterprises and the rich.
Regardless of whether supporters or critics agree, cryptocurrency impacts the environment. It consumes energy mostly from fossil fuels.
At a time when the world desperately needs to reduce its carbon footprint, the last thing anyone wants is another source of profit at the expense of the planet and its inhabitants.