According to environmental scientists, increased adoption of Bitcoin will lead to a dramatic increase in carbon emissions, sending global temperatures over 2°C. The article, published by Nature, shows the correlation between increased usage and the power-intensive equipment used to mine the popular digital currency.
Bitcoin’s Global Impact
After years of uncertainty, Bitcoin is hailed as a revolutionary payment system. Awareness of the cryptocurrency has spread rapidly across institutions, governments, and retail investors alike. By introducing blockchain technology, Bitcoin is an emerging asset that has the world’s complete attention.
Although the technology is revolutionary to many fields, there is also a side that calls into question how it can lead to potentially devastating environmental consequences. The vast majority of Bitcoin users are unaware of the computationally-demanding equipment that’s used to verify and mine blocks on the Bitcoin blockchain. This power-intensive protocol called proof-of-work necessitates vast amounts of electricity, which in turn creates CO2.
The Paris Agreement is a landmark pact between 176 countries to strengthen the world’s response to global warming and find solutions to mitigate human-related carbon emissions. The agreements’ overall goal is to keep the world’s temperature well below 2°C above pre-industrial levels.
The study notes that at the current rate, Bitcoin’s reliance on electricity will send the world over the 2°C limit in as little as two decades. Should Bitcoin follow the median growth trend of emerging technologies, it can be expected that the temperature increase can happen in as little as 11 years. The study forecasted that even if Bitcoin followed the current rate of the slowest adopted technology, it would increase the global temperature in as little as 22 years.
The global rise in temperature of 2°C is significant because it increases the potential for catastrophic droughts, wildfires, ocean acidification, heat waves, sea-level rise, storms, and famine.
The study reasons that economic motivation will continue to drive the mainstream adoption of Bitcoin, therefore increasing pressure on mining farms to grow. Considering electricity, labor, and land costs are much cheaper in developing countries, it is a significant concern that as Bitcoin becomes more expensive to mine, more companies will head to regions that will allow for uninhibited operations.
Every single transaction that occurs on the Bitcoin blockchain is sent to a ‘block’ to be verified by a miner. Regardless of the value, the miner must perform the necessary calculations to earn the reward for their work. If Bitcoin transactions increase, it can be assumed that the calculations will increase in difficulty, therefore forcing miners to increase their output.
So far, the study calculated that Bitcoin annually emits 33.5 metric-tons of CO2. By gathering data from mining equipment and average costs for electricity, it was found that Bitcoin emitted 69 MtCO2 in 2017. This study focused on Bitcoin only but does understand that these figures can look much worse when including all other mineable cryptocurrencies.
A Need For Change
By understanding the global impact that Bitcoin is having at this very moment, the crypto community needs to push for change. Scaling solutions are the most relevant, where transactions can be verified on side channels such as Lightning Network, to offset the bloat of the main Bitcoin blockchain.
Thus far, there isn’t a discussion on migrating the consensus mechanism of Bitcoin to proof-of-stake or even a hybrid between PoS and PoW to minimize electricity needs. The economic incentives shadow the environmental impact.
Just as the world came together for the Paris Agreement, the study urges the crypto community to find a way to reduce their carbon footprint by implementing features that increase efficiency.