Among the most recurrent arguments for those against cryptocurrencies like Bitcoin is usually the level of contamination they generate. Among the harmful effects of cryptocurrencies on the planet, the ones that cause the most concern are those that have a direct impact on the environment.
To better understand why a currency that does not exist beyond its digital form has a real environmental impact, let’s go to the origin of the matter and how they are created and what real resources are required for their birth and digital footprint.
Environmental impact of Bitcoin
All the studies carried out so far indicate that the computer mining necessary to create Bitcoins generates an enormous consumption of electricity, which translates into the emission of hundreds of millions of tons of greenhouse gases (GHG).
Only bitcoin operations in China (main place of mining farms next to Kazakhstan) will produce 130 million tons of GHG in 2024, more than the entire economy of the Czech Republic generates in one year.
If Bitcoin were a country, it would be among the 30 that consume the most energy in the world, spending more electricity per year than entire countries Ukraine, Norway, Egypt, Poland, Finland, Switzerland or Argentina, according to a analysis by the Center for Alternative Finance at the University of Cambridge. The estimate is 140.25 terawatt-hours per year. In Iceland, for example, the electricity demanded by the Bitcoin mines is already about to exceed the consumption of all the homes on the island.
Bitcoin mining is very polluting.
The production of Bitcoins requires the operation of hundreds of thousands of megacomputers with extremely expensive hardware operating non-stop, at full capacity, which is an enormous energy expense.
And it is that the mining of this cryptocurrency is based on the constant verification of transactions through very complicated mathematical calculations, processing a series of transactions and sealing the blocks, obtaining cryptocurrencies as a reward for those sealed.
A Morgan Stanley report published in 2017 already detailed that for each digital currency that is created, the same is consumed, on average, as an American household for two years. Another recent study by economists Alex de Vries and Christian Stoll, from the Dutch central bank and MIT in 2020 estimated at 112.5 million Bitcoin transactions in that same year and each of them produced 272 g of electronic waste. Bitcoin, in total, would generate 30.7 kilotons of waste annually.
Cryptocurrency carbon emissions
The financial system of all life also generates waste in the form of ATMs, computers, credit cards and other devices that are used on a daily basis. Compared to other industries, the Bitcoin network emits 41 metric tons of carbon dioxide. This is less than the gold industry, the global banking system, or the aviation industry.
Elon Musk, back and forth cryptoecology
The figure of Elon Musk is the perfect example of what a butterfly effect can be at the cryptocurrency level. Last year, the issue of pollution returned to the debate after the billionaire, through his electric car company Tesla, reported the purchase of 1.5 billion dollars in Bitcoin, shooting up the price of the cryptocurrency and increasing criticism for the pollution it generates. Later, he even allowed the payment of these cars using Bitcoins.
For 50 days, the Tesla eco-car could be bought with polluting Bitcoins.
Only 50 days later, he made a “where I said I say, I say Diego” and reversed his decision (the price of the cryptocurrency fell by 12% in just a few hours), justified by the increasing use of fossil fuels, especially coal, for mining and transactions with Bitcoins.
Musk thus wanted to end the paradox of selling electric cars to avoid carbon emissions and, at the same time, allow a highly polluting method such as Bitcoin as a means of payment.
