A single bitcoin transaction has a carbon footprint of 359.04 kgCO2 – equivalent to the carbon footprint of 795,752 VISA transactions or 59,840 hours of watching YouTube.
Along with the rise in the price of bitcoin, its negative impact on the environment is also ringing alarm bells louder. Bitcoin mining, which requires a tremendous amount of energy leading to high levels of carbon footprint, is well on its way to equal the annual carbon emission of 98.9 megatons (Mt) CO2 produced by the London city, said cryptocurrency economist Alex De Vries in a research published in the journal Joule citing information from citycarbonfootprints.info. According to the Digiconomist blog, founded by De Vries, a single bitcoin transaction has a carbon footprint of 359.04 kgCO2 – equivalent to the carbon footprint of 795,752 VISA transactions or 59,840 hours of watching YouTube. The energy usage is equivalent to the power consumption of an average U.S. household over 25.91 days. The annual carbon footprints for Delhi and Mumbai have been 69.6 Mt CO2 and 32.1 Mt CO2.
“The record-breaking surge in Bitcoin price at the start of 2021 could result in the network consuming as much energy as all data centers globally…Beyond these environmental impacts, the production of specialized mining devices might exacerbate the global shortage of chips, which could effect the ability to work from home, the economic recovery after the COVID-19 crisis, and the production of electric vehicles,” De Vries said in the research paper. Bitcoin price has jumped from $5,363 as of March 19, 2020, to $58,567 as of March 18, 2021, according to Coindesk data.
However, the energy required is also important to make the bitcoin network safe. “There is a cost and energy required to maintain everything. An increase in computation is necessary to make the network secure for the Bitcoin network. However, if we are to compare it with the existing consumption of the Banking system, it is still much lower. The energy consumption in the existing conventional system including – Central bank, Payment system, Banks, Money, etc., in total result in more carbon footprints,” Kumar Gaurav, Founder and CEO, Cashaa told Financial Express Online.
According to De Vries, around 60 per cent of the costs of mining bitcoin is related to the price of the electricity used. Recently Bill Gates had also raised concern over bitcoin’s impact on climate. “Bitcoin uses more electricity per transaction than any other method known to mankind…It’s not a great climate thing,” Gates told the New York Times in a recent interview.
De Vries suggested that in order to control the impact of bitcoin on the environment, policymakers globally may take a hint from regions that had put pressure on bitcoin miners. For instance, Québec in Canada, where a moratorium on new mining operations was imposed. Likewise, Iran had decided to confiscate mining equipment after there were power outages due to cryptocurrency mining. “Moreover, the supply chain of specialised bitcoin mining devices is concentrated among only a handful of companies. Manufacturers like Bitmain can be burdened with additional taxes like tobacco companies or be limited in their access to chip production.”
“Once we replace or eliminate central bank, payment system, banks, and money, we can make the earth cleaner, greener. Millions of trees are cut every day to produce paper that makes the currency notes in India. In addition to this, networks like UPI, RTGS, SWIFT require significant energy, and still have downtime and are exposed to hackers, causing the loss of millions of dollars. The choice will always be there, whether to stick to multiple facts that together allow less safety leaving higher carbon footprints, or condense and replace the system with a more technologically advanced and secure system that all in all consumes lesser energy,” added Gaurav.