There’s a lot of talk these days about the crash of the so-called ‘bitcoin bubble’, but a lesser-known aspect of crypto investing is the huge power drain that these novel currencies incur. According to one estimate made by Spyros Foteinis, a Greek environmental engineer, bitcoin and ethereum mining are already consuming 47 terawatt-hours per year. To put things into perspective, Greece, a country of 11 million people, consumes 57 terawatt-hours annually.
Bitcoin and ethereum together have a market cap of 88% of the total cryptocurrency market, so the whole cryptocurrency ecosystem is consuming even more power.
The reason why bitcoin and other cryptocurrencies use so much energy is rooted in the very way such networks operate. A digital currency isn’t controlled by a central bank but by the whole network of users who compile comprehensive records of payment transactions, known as “blockchain.” To compile these records, the network relies on “miners”, which are basically computers (like your own) occupied with solving complex mathematical problems in exchange for electronic coins.
Verifying transactions or “mining” becomes increasingly difficult as demand for bitcoin increases — and with it more demand for high-powered computer processing. This implies even more energy usage.
According to Foteinis, 58% of all crypto mining happens in China, where much of the power comes from coal-powered plants. Using a life-cycle assessment, Foteinis estimates bitcoin and ethereum mining emits as much greenhouse gases as 6.8 million average European inhabitants — or as much as 43.9 million tones of carbon dioxide equivalent.
By these figures, we can gather that not only are cryptocurrencies financially unstable, but also environmentally unstable as well.
“In my opinion, the cryptocurrency industry is urgently in need of reform to make it environmentally sustainable,” Foteinis wrote in a Nature editorial.
There are a couple of solutions to this problem. One would be to change the protocol of bitcoin and other cryptos to lower energy expenditure. Alternatively, users can switch entirely to new cryptos that are designed to use less power from the beginning. Ethereum, which is less decentralized than bitcoin, is working on changing its protocol to reduce energy use.