Since making its way into the market in 2008, Bitcoin has been subject to many conversations and has had many investors scrambling to purchase a piece of the pie. Since Bitcoin is only available in digital form, it leaves many people wondering just how good it is for the environment.
Currently, the Bitcoin network consumes more energy than many countries do in one year. In addition, Bitcoin mining generates a considerable amount of electricity waste every year. The environmental impact of all this has environmentalists around the world concerned.
Knowing what Bitcoin is and how it works gives investors more insight into whether or not they should invest in digital currency. Keep reading to discover what bitcoin is and how it is affecting the environment.
Bitcoin is a digital currency that allows for secure and seamless internet-based peer-to-peer transactions. It is one of the first cryptocurrencies that was widely used. Any two people can send Bitcoin to each other without having to go through a bank or government.
By removing the need for governments or banks, it allows money to move around the global internet more quickly and cheaply, as well as allowing individuals to gain control over their own assets. With Bitcoin, you can travel, make contributions to charity, hold, and trade the currency legally. It's accepted by many businesses around the world.
Blockchain is a digital ledger that tracks every Bitcoin transaction, similar to a bank's ledger that tracks money going in and out of the bank. It is a record of every Bitcoin transaction that has ever taken place.
Only 21 million bitcoins will ever exist. Inflation and manipulation of this type of money are impossible. Bitcoin does not have to be purchased in its entirety: you can purchase a fraction if that is all you need. Currently, it does not exist in any form except digitally.
What is Bitcoin Mining?
Mining is the process of putting new Bitcoins into circulation to be able to verify and develop the blockchain ledger. The process involves a process using hardware known as GPUs and sophisticated mathematical computations.
The act of mining can be time-consuming and somewhat expensive for those who choose to be a part of it. This is because, after much hard work, a miner may or may not be awarded the block of bitcoins that come up. Because of this, the mining process starts over again in hopes that they have better luck next time.
Energy Requirements of Bitcoin Mining
Since Bitcoin mining involves so much time spent working through mathematical calculations to discover just the right sequence, there is quite a bit of energy that is consumed during the process. The process involves many miners that compete to be the first ones to solve the puzzle for the sole purpose of being rewarded the block.
Because of this intensive process and the many computers that are involved in gaining favor from just a small block of bitcoins, the amount of energy that is used can be astronomical. Some studies have shown that the mining of Bitcoin alone has been seen to consume more energy than countries like Argentina or Sweden.
In most cases, Bitcoin mining companies look for locations that are rich in energy that they can get at cheaper prices. The consequence of this, however, is that the amount of energy used becomes huge within a centrally located area.
Altogether, it is evident that since more and more people are getting involved in either Bitcoin trading or even in the process of mining itself, energy consumption will only increase over time. This is resulting in a major concern for the effect it may have on the environment.
Bitcoin Mining and the Environment
Environmentalists around the world have expressed much concern about the amount of energy that is not only currently being used for Bitcoin mining, but also the level of the increase due to more complicated computations for the blockchain.
Research has shown that the United States, which gets much of its energy from fossil fuels, is the leader currently in Bitcoin mining operations. This means that millions of tons of carbon dioxide emissions are being released into the atmosphere due to Bitcoin mining alone. In addition, the network of Bitcoin mining is also responsible for thousands of tons of waste from these GPU cards every year. This is because many of these parts cannot be reused in any way after they have been used for Bitcoin mining.
Much of this energy used to mine Bitcoin has come from using power plants that would have been shut down but were reallocated to provide energy for these mining industries. Many of these plants use fossil fuels and other sources of energy that produce these carbon emissions that have environmentalists saying enough is enough.
Changes in Bitcoin Mining that Could Impact Energy Usage
Some changes are on the horizon for many of the cryptocurrency mining processes since environmentalists have raised concerns. Some of these include changing the design of some of the blockchains to use less energy by not requiring the use of intensive processes like mining rigs. Such as changing from a proof of work to a proof of stake mining process (Ethereum).
While the Bitcoin mining operation has a long way to go before they are seen as environmentally friendly, many changes that are being made have the potential to decrease energy consumption. Although it is not clear how much of an impact these mining changes may have on the environment due mostly to the fact that there will still be quite a bit of waste until experts can find ways to repurpose and reuse them.
It is worth mentioning, however, that while Bitcoin is taking up a lot of energy, and is working towards lessening its environmental footprint, the environmental impact of brick and mortar banks is just as bad. The amount of fossil fuels, and building materials used to build a bank, provide it with electricity, and the high-level security systems needed to keep the money safe is no small sum. And there are hundreds of thousands of banks across the country and around the world.
Therefore, while critics of the coin are quick to criticize Bitcoin’s use of fossil fuels, they should really be looking in the mirror, as the cars driven by almost every American are making a bigger impact on this world, as are the brick and mortar money institutions that send your money slowly and inefficiently. In fact, after some research, people may just find that Bitcoin is the better choice for the future.
Hopefully, in the future, Bitcoin’s reliance on fossil fuels will decrease. But for now, if it concerns you so much, you should probably stop driving your car everywhere. The environment will thank you. So to answer your question, yes, Bitcoin is bad for the environment, but so too is almost every aspect of your life, so you shouldn’t let that stop you from using the cryptocurrency.