As Bitcoin gains use in international transactions, and in providing finances to people without access to regular banks, critics are pointing to the environmental costs exacted by the powerful computers used to “mine” buried Bitcoin codes.
Bitcoin miners use huge amounts of energy, enough to power Ireland for one year, according to at least one study. Mining guzzles far more electricity per transaction than all the world’s banks put together, according to Alex de Vries, Bitcoin energy expert at PwC and Digiconomist blogger.
Also alarming critics, the electricity used for bitcoin produces about 22 megatons of carbon dioxide annually, according to a study in the scientific journal Joule. This carbon dioxide largely comes from coal, said de Vries.
Bitcoin enthusiasts say the criticism is overblown. More than three-fourths of global bitcoin mining is powered by renewables, according to a report by digital-asset management firm Coinshares. Moreover, many of the bitcoin mining rigs that are located in places that use “dirty” fossil fuels — like China — are moving to cleaner parts of the world using hydropower, like Iceland, said Katrina Kelly-Pitou, a research associate in electrical and computer engineering at the University of Pittsburgh.
Not so fast, critics say. The percentage of bitcoin mining that comes from renewables may be misleading. About 80% of all bitcoin miners are located in China’s Sichuan province, and while they rely on hydropower they need to supplement that energy source with coal, said de Vries.
In the summer’s wet season, Chinese mining rigs use at least three times more horsepower than they do in the winter’s dry season, he said. The result, de Vries said, are emissions on the same level as natural gas.
Kelly-Pitou said that the current argument over Bitcoin and energy use is oversimplified. New technologies like computers, and before that trains, planes and automobiles, are often energy-intensive, she wrote in a column last year. Over time, as the technologies improve they become more efficient in energy use.
Also, Bitcoin mining methods that use far less computing power are starting to become more popular. According to Web Begole, head of information technology at Exante Data, greener alternatives include Proof of Stake (PoS) protocols, Byzantine Fault Tolerant protocols and second- layer solutions such as Lightning. Ethereum, for instance, plans to replace Proof of Work with Proof of Stake.