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New Environmental Concerns Arise from Bitcoin

Bitcoin, while an excellent solution for cross-border payments and the issue of government involvement in banks, has always been a problem to the environment. Most of these issues arise from the amount of electricity used to process a single BTC transaction.

But now, there are new environmental problems being approached by environmentalists. They state that the issues with Bitcoin go far beyond just electricity usage. Keep reading to learn more (and watch us debunk their concerns!)

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Bitcoin Environmental Problems: Electricity

Bitcoin’s environmental problems have long been the energy consumption associated with the cryptocurrency. Not only are all transactions electronically processed, but because they are based on a consensus mechanism, multiple machines have to run to process a single transaction.

Additionally, most Bitcoin miners are leaving their machines running all the time in hopes of being chosen to process a transaction—which means even when there are no transactions being processed, all this electricity is still being consumed by devices that want to remain on the Bitcoin network.

Then, you need to consider where this electricity comes from. For those who don’t know, most electricity is created through the use (burning) of fossil fuels. This means that carbon emissions are produced in the process—so Bitcoin is both adding to carbon emissions and consuming copious amounts of electricity.

But until recently, this was the one caveat. Now, environmentalists have found another way that Bitcoin is affecting the environment.

Related: Is Bitcoin Bad for the Environment?

Bitcoin Environmental Problems: Water Consumption

Alex De Vries, an environmental researcher, recently discovered that every Bitcoin transaction processed consumes the same amount of water found in a swimming pool. This is due to the water used to cool Bitcoin mining equipment, as well as the electricity consumed, which is created using hydropower.

But before you jump to conclusions, it's important to dissect this claim and break down what it really means.

In his research paper, De Vries found that each Bitcoin transaction consumes a swimming pool of water in hydroelectricity and cooling. But if this is true, then this is saying that the same transaction doesn’t consume the fossil fuels associated with previous claims.

De Vries’ calculations only use the full energy consumption for one transaction, converting it to hydroelectric consumption. When this is the case, he can’t also assume the transaction is using fossil fuels.

In most countries, both fossil fuel electricity and hydroelectricity are put in the grid for citizen use, which means that while Bitcoin does use copious amounts of electricity, it uses both hydroelectric power and some fossil fuel power, but not every transaction uses an entire swimming pool of water and produces carbon emissions from burning fossil fuels at the same time.

Therefore, there is no need to panic, the effect of Bitcoin mining on the environment hasn’t actually changed, De Vries simply created a new quantifier for it—water usage instead of carbon production.

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Will Bitcoin Destroy the Environment?

This brings up another issue. Environmentalists everywhere are clamoring that Bitcoin will eventually destroy the environment as transaction numbers increase and more people use the network, but this is a false claim.

Remember, Bitcoin can only process a certain number of transactions, about 5-7 per second, and at some point, it tops out. Because of this, several layer two solutions, like the lightning layer, have been created to increase transaction times and lower the pressure on the network.

Despite what environmentalists claim, Bitcoin transactions increasing isn’t an issue. Sure, more people may use the network over time, but Bitcoin has a maximum number of transactions during a 24-hour period that can never be exceeded—and these are the numbers that most scientists are currently using in their research.

This means that while the current claims of energy usage are true, they will not increase over time or create doom for the earth (more than it is already, anyway). And this brings up another point, more and more miners are exiting Bitcoin as the competition to process transactions becomes more intense. So, it is actually likely that while the transactions won’t decrease, the miners running equipment that isn’t processing transactions will decrease.

Therefore, we expect that Bitcoin’s effect on the environment is actually quite stable, whether you measure it in water usage, or electricity usage, or carbon emissions.

Related: Bitcoin Prices Are Expected to Rise: Is It True?

Will Not Using Bitcoin Save the Environment?

We admit that Bitcoin isn’t the best for the environment, but do you know what else isn’t good for the environment? Credit card transactions and cash production.

Both swiping a credit card and using paper money results in energy consumption. Sure, visa transactions use less than Bitcoin transactions, and cash creation is a somewhat one-time energy usage (in terms of trees being cut down and turned into money in the factory), but let's look deeper.

When you use a credit card, it is likely tied to a bank. This bank has a physical building made of cut-down trees (carbon emission) with lights and computers and digitally protected vaults (electricity consumption). When you drop off or retrieve cash from a bank, it is taken to other banks via an armored vehicle (carbon emissions and fossil fuel usage) and placed in an ATM for withdrawal (energy consumption to keep the ATM on 24/7).

This means that using a credit card or cash isn’t good for the environment either. The difference is, that it’s hard to quantify these effects on the environment.

Because Bitcoin has so many fewer variables, it's easy to say it uses a lot of a single variable, which is fuel. In his paper, De Vries compared a visa transaction's electricity usage to Bitcoin transaction electricity usage, and sure, Bitcoin used more, BUT if he looks at all the electricity associated with having a visa card (especially the fact that bank buildings are usually massive and filled with computer servers and employees that spend their days surfing YouTube), we think that he will find that a credit card swipe is just as costly as a Bitcoin transaction.

Overall, as you read all this doom and gloom about Bitcoin’s effect on the environment, take it with a grain of salt. As a human on this earth, you are using electricity and producing carbon emissions in everything you do. If you would rather use Bitcoin, which has a room of servers, versus a bank card, which has a massive building filled with machines and useless employees, the choice is yours. Either way, you are consuming resources, it’s just a matter of principle of what type of resource consumption you want to support.

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Bitcoin | Environmental concerns | Environmental destruction | Bitcoin and the environment | Visa transactions

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