Bitcoin mining: CO2 emissions higher than in the whole of Austria!

Bitcoin mining: CO2 emissions higher than in the whole of Austria!

The Bitcoin network has an alarming carbon footprint of 98 million tons per year, which is more than Austria's annual greenhouse gas emissions, which are around 69 million tons. This frightening result shows that cryptocurrencies, especially Bitcoin, are not only financially but also environmentally burdensome. Each Bitcoin transaction produces as much CO2 as 105,000 hours of YouTube videos or 1.4 million Visa transactions. These numbers illustrate how much energy consumption Bitcoin mining has on the environment.

The Bitcoin network uses blockchain technology to validate transactions in a forgery-proof manner. This validation is currently carried out using the “Proof of Work” (PoW) process. Numerous miners compete to solve complex cryptographic puzzles, which leads to high energy consumption. The majority of the energy required comes from fossil sources, which contributes significantly to CO2 emissions. According to forecasts, the electricity demand for Bitcoin mining will be over 135 terawatt hours (TWh) in 2023, which means more energy consumption than many populous countries, including even Pakistan.

Environmental impact of Bitcoin mining

A study by Kaveh Madani and his team, published in the journal Earth's Future, showed that around 173 TWh were needed for Bitcoin mining between 2020 and 2021. This represents a 60% increase compared to 2018-2019. The study shows that 67% of electricity for mining came from fossil energy sources and only about 16% was supplied by hydropower. This leads to a huge environmental problem. The water footprint of Bitcoin production was 1.65 cubic kilometers, which would be enough to provide water to over 300 million people in rural Africa.

The proof-of-work system, which serves as the technical foundation for Bitcoin, allows anonymous participants to build trust in a decentralized network. The advantages of PoW lie in the high level of security and the decentralized validation of transactions. But the disadvantages are also serious: slow processing, high fees and enormous energy consumption reduce the attractiveness of this system. The average fee for a Bitcoin transaction is currently around $23 and increases during times of high demand.

Future outlook and alternatives

A possible solution to these problems could be alternative consensus protocols such as Proof of Stake (PoS), which requires far less computing power and could reduce energy consumption by up to 99%. Ethereum has already successfully transitioned to PoS, showing that a more sustainable and efficient solution for blockchain technologies is possible. However, this method comes with its own challenges that need to be overcome.

Given the environmental impact and enormous energy consumption, cryptocurrencies like Bitcoin are under intense pressure from environmentalists and policymakers. The discussion about sustainable solutions for blockchain technology will be crucial in the coming years. The challenges are great, but the need for an environmentally friendly approach to digital currency is undeniable.