The environmental effects of Bitcoin are considerable. One such environmental effect is that it worsens climate change.[1] This is because bitcoins are made using electricity partially generated by gas and coal-fired power plants. When burned, coal and natural gas emit greenhouse gases, which heat the Earth and change the climate.[2] As of 2022, such bitcoin mining is estimated to be responsible for 0.1% of world greenhouse gas emissions.[3] A second environmental effect is the air pollution caused by coal-fired electricity generation, and a third is the e-waste due to the short life expectancy of bitcoin-mining equipment.[1]
Bitcoin is a cryptocurrency made by proof-of-work,[2][4] while some other cryptocurrencies, such as Ethereum, are made by proof-of-stake,[5] which consumes less electricity.[6][7] As of 2022, the Cambridge Centre for Alternative Finance (CCAF) estimates that Bitcoin consumes around 100 TW⋅h (360 PJ) annually, and says bitcoin mining uses about as much electricity as Egypt.[8][9] But it is difficult to find out how the electricity used for mining was generated, and thus Bitcoin's carbon footprint.[10][11][12][13] One study found that from 2016 to 2021, each US dollar worth of bitcoin mined caused 35 cents worth of climate damage, comparable to the beef industry and the gasoline industry.[14][15][16]
As of 2021, Bitcoin's annual e-waste is estimated to be over 30,000 tonnes, which is comparable to the small IT equipment waste produced by the Netherlands. Creating one bitcoin generates 270 to 380 grams (9.5 to 13.4 oz) of e-waste. The average lifespan of bitcoin-mining devices is estimated to be about 1.3 years.[17][18][19] Unlike most computing hardware, the used application-specific integrated circuits have no alternative use beyond bitcoin mining.[20]
Reducing Bitcoin's environmental effects is difficult; possible remedies include making bitcoin only where or when there is excess clean electricity.[21][22] Some policymakers have called for further restrictions or bans on bitcoin mining.
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Bitcoin energy consumption
As of 2022, the Cambridge Centre for Alternative Finance (CCAF) estimates that Bitcoin consumes 131 TW⋅h (470 PJ) annually, representing 0.29% of the world's energy production and 0.59% of the world's electricity production, ranking Bitcoin mining between Ukraine and Egypt in terms of electricity consumption.[25][9]
George Kamiya, writing for the International Energy Agency, said that "predictions about Bitcoin consuming the entire world's electricity" were sensational, but that the area "requires careful monitoring and rigorous analysis".[26] One study in 2021 by cryptocurrency investment firm Galaxy Digital claimed that Bitcoin mining used less energy than the banking system, with Galaxy Digital later clarifying that bitcoin mining's energy usage is not correlated with its "transactional volume or throughput" as it is in banking.[27]
Sources of energy
Until 2021, according to the CCAF, much of the mining for Bitcoin was done in China.[28][29] Chinese miners relied on cheap coal power in Xinjiang[30][31] in late autumn, winter and spring, and then migrated to regions with overcapacities in low-cost hydropower, like Sichuan, between May and October. In June 2021 China banned bitcoin mining[32] and the miners moved to other countries.[33] By December 2021, the global computational capacity had mostly recovered to a level before China's crackdown, with more mining being done in the U.S. (35.4%), Kazakhstan (18.1%), and Russia (11%) instead.[34] Coal power plants in Kazakhstan generate most of the country’s electricity and emit lots of local air pollution.[35]
Greenidge Generation, a natural gas coal power plant in Dresden, New York, had originally been built for coal and had shut down in 2011 due to lack of demand. The plant reactivated in 2016 as a natural gas plant but failed to find sufficient demand. It switched entirely to bitcoin mining in 2019. In addition to emitting around 220,000 tonnes of carbon dioxide in 2020, the plant's cooling intake and discharge of heated water into Seneca Lake coincided with a significant decrease in fish and other wildlife populations.[36] In 2022, the plant's air permit request was denied by the New York State Department of Environmental Conservation (DEC).[37][38]
As of September 2021, according to the New York Times, Bitcoin's use of renewables ranged from 40% to 75%.[2] Experts and government authorities have suggested that the use of renewable energy for mining may limit the availability of clean energy for ordinary uses by the general population.