By Aadi D. (PAH)
The use of blockchain technology and mining of cryptocurrencies have skyrocketed in recent years, and consequently so have its environmental consequences. But what actually are these consequences, and do they actually have any real significance? From the coal-powered mining hubs in Kazakhstan to the hydro-powered blockchain facilities in Norway, the ecological footprint of these systems have sparked many debates. Although hailed by tech advocates across the globe as a beacon of futuristic innovation, the energy-intensive processes behind these blockchain systems have drawn scrutiny from environmentalists, policy makers, and communities grappling with grid strain and emissions. Raising the question, are crypto currencies really the way forward if we are to consider ourselves to be an environmentally conscious society?
Blockchain networks, in particular those that use Proof of Work (PoW) mechanisms, like Bitcoin, rely on energy intensive computing processes to validate each individual crypto-transaction. Mining these ‘coins’ involve the computer solving cryptographic puzzles, a competitive and intensive process that requires specialised hardware and vast amounts of electricity. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin consumes approximately 174 terawatt-hours (TWh) annually which is more than the cumulative energy used by countries like Argentina or Norway. [1]. This equates to roughly 65 million tonnes of CO2 emissions yearly, comparable to Greece’s national carbon footprint [2]. The environmental impact of mining is almost entirely dependant on regional energy sources; before China’s crypto ban of 2021, coal-powered crypto operations in Xinjiang and inner Mongolia contributed to a staggering 41 million tonnes of CO2 annually [3]. In contrast, countries like Iceland leverage their geothermal and hydropower capabilities, theoretically reducing Bitcoin’s carbon intensity by up to 99% [4]. A 2018 study by the University of Hawaii at Manoa warned that Bitcoin mining could push global warming beyond the 2°C mark if the adoption rates for this technology mirror that of cars [5].
Cryptocurrency mining also accelerates the production of electronic waste generation. This is due to the short lifespan of the application-specific integrated circuits (ASICs) that are needed to mine Crypto, with these specialised pieces of hardware being rendered almost completely obsolete within 1.5 years of creation as newer models emerge[6]. Bitcoin alone produces an estimated 30.7 Kilotonnes of e-waste annually, similar to the Netherlands’ yearly IT equipment waste[7]. These discarded ASICs, often containing lead and mercury, pose environmental hazards when improperly recycled. Similarly, e-waste is on track to reach 82 million tonnes of waste produced annually by 2030[8] , aggravating the scale of the broader e-waste crisis.
Mining operations often gravitate towards regions with cheaper electricity rates, sometimes overwhelming the local grids. In 2018, Plattsburgh, New York, faced a $10 rise in their residential electricity prices due to concentrated crypto mining activity [9]. On the other hand, states like Texas have capitalised on mining to monetise stranded renewable energy, with over a quarter of Bitcoin mining in Texas powered by wind and solar. Globally however, fossil fuels still dominate the sector. Kazakhstan, which hosted 18% of Bitcoin’s hash rate in 2021, relies on coal for 70% of its electricity[10]. The International Energy Agency (IEA) estimates that 39% of mining uses renewables, but growth of the blockchain in oil rich regions like Iran and Russia risks placing the industry into more carbon-intensive pathways.
However, despite this bleak outlook, there have been efforts to reduce the blockchain’s environmental footprint. Ethereum’s 2022 shift to Proof of Stake (PoS) system, which replaces mining with energy efficient staking, cut its energy use by 99.9%, taking crypto a leap further into ameliorating their sustainability.[11] Renewable energy adoption among miners has also been rising in recent years with 58% of Bitcoin miners now using sustainable sources, up from 36% in 2020 [12].
The environmental impact of blockchain and crypto currencies defies simplistic judgement. While PoW-based networks pose significant challenges for energy consumption, the sector has been shifting towards renewables with new technology and software undoubtedly playing a part in partially reducing environmental harm. The issue of extensive amounts of electricity that blockchains use still exist. Although this issue is not likely to go away any time soon, in order for the industry to move forward and evolve, governments and developers must collaborate in order to ensure the blockchain’s potential aligns with the ambitious global sustainability goals of the future.
Works Cited
[1] https://www.bbc.co.uk/news/technology-56012952
[2] https://www.independent.co.uk/tech/bitcoin-mining-climate-environment-b2021712.html
[5] https://www.sciencedaily.com/releases/2018/10/181029130951.htm
[6] https://www.sciencedirect.com/science/article/pii/S2542435119302557
[9] https://bfi.uchicago.edu/wp-content/uploads/2023/06/BFI_WP_2023-78.pdf
[10] https://www.iea.org/reports/kazakhstan-2022/executive-summary
[12] https://scoop.market.us/cryptocurrency-mining-statistics/
