The Bitcoin hazard

By Roxy Costello-Ross

With cryptocurrencies such as Bitcoin becoming increasingly popular in recent years for their ease, ingenuity and potential for making profits, even replacing more traditional money management methods for some, one question is yet to be answered: are the benefits of Bitcoin worth its bad effects on the environment? Cryptocurrency is created by code and works in many cases by awarding coins to computers that add transactions to the blockchain, also known as mining. The process of mining, however, generates significant quantities of electronic waste, and while not every cryptocurrency uses this method, enough of them do for it to be considered a new environmental issue.

Mining also tends to become less efficient as the price of cryptocurrency increases, meaning the network will consume more computing power and energy to process the same number of transactions - a major concern for environmentalists. According to researchers at the University of Cambridge, 65% of

bitcoin miners are also located in China, a country that generates most of its energy by burning coal which contributes significantly to climate change. A report by CNBC stated that bitcoin mining accounts for about 35.95 million tons of carbon dioxide emissions per year, around the same amount as New Zealand!

Proof-of-work blockchains used by Bitcoin and other cryptocurrencies record transactions by a distributed network of miners rather than storing account balances in a central database. The specialised computers record new blocks, created by solving cryptographic puzzles. While this mechanism makes cryptocurrencies more secure, it requires astronomical amounts of energy to keep up. As well as this, a 2019 study suggested that the hardware used to support these methods becomes obsolete roughly every 18 months, creating even more waste. This specialised computer hardware cannot be used for any other purpose, and so it is estimated that the Bitcoin network generates between 8,000-12,000 tons of electronic waste per annum. In 2021, the BBC reported that Bitcoin uses 121 Terawatt-hours of electricity every year - more than the entire country of Argentina.

But is printing money any better than cryptocurrency? According to the World Wildlife Fund, mills across the world produce 400 million tons of paper each year, some of which is used in the printing of banknotes, causing deforestation that is responsible for about 12% of all greenhouse gas emissions. The Bank of England, however, made the switch to polymer banknotes, and while the materials used are arguably less sustainable, a study by the BoE found that plastic banknotes only have to last 1.33 times longer than traditional ones to achieve a lower global warming potential and that they could last up to 2.5 times longer and are recyclable. So yes, printing money may just be more sustainable.

Whether in favour of cryptocurrencies or against them, there is little doubt that Bitcoin and similar blockchains use enormous amounts of energy, much of which comes from burning coal and other fossil fuels. Advocates have argued that Bitcoin’s energy needs to come from renewable sources, and though these figures are disputed, there is no denying that mining is now a major factor in increasing carbon dioxide emissions, even in the best-case scenarios.