Crypto mining, the process of generating new tokens, consumes a lot of energy, which impacts growing concern over the environmental impacts of virtual currencies. Critics say cryptocurrencies contribute significant carbon pollution, almost similar to that of the entire City of London. In 2017, Bitcoin mining consumed about 30 terawatt-hours, the same energy as the Republic of Ireland.
The increased difficulty in solving math problems required to mint new Bitcoin tokens contributes to the consumption of high computation power. While experts still struggle to determine the exact amount of electricity Bitcoin mining consumes, reports estimate it is about 121 terawatt-hours annually.
The main environmental issue with Bitcoin mining is the production of greenhouse gas emissions that come from using fossil fuels to generate electricity. Miners often operate in areas with cheaper electricity costs, such as China, accounting for over 65% of the world's crypto mining operations. Others are in Russia, Kazakhstan, Iran, Malaysia, and the US. Those countries produce and subsidize fossil fuels for electricity.
Apart from fossil-fueled electricity, others also argue cryptocurrencies generate a substantial amount of e-waste. That comes from the advanced computer systems used by crypto miners. The complexity of Bitcoin mining means the hardware usually becomes obsolete after about one and a half years. Miners cannot repurpose the hardware since they are for singular use. Instead, they incinerate the hardware or send it to the less-developed nations, ending in unregulated landfills.
How Bitcoin Can Go Green
Bitcoin can still "go Green" despite its significant environmental impacts. Several small-scale Bitcoin mining plants are exploring ways of making it more sustainable, creating a solid platform for others to follow suit. Those operations mainly seek to reduce the amount of electricity required for crypto mining and the heat generated from the hardware. Others are also shifting to non-renewable energy to power Bitcoin mining activities.
Some Bitcoin mining firms have moved from fossil-fueled electricity, using renewable energy sources like wind, solar and nuclear power. For example, the Moonlite Project has built a Bitcoin mining data center that will run entirely on low-cost renewable energy.
In 2020, a Dallas-based company called Autonomous launched a 150-megawatt crypto-mining data center called HODL Ranch. It is the first large-scale operation powered by the region's vast solar and wind farms. The center's miners have demand response contracts with the Texas grid, shutting down their machines at a moment's notice during peak power demand in exchange for rebates.
Another US firm, Crusoe Energy Systems, has raised $250 million to run Bitcoin mining operations in six states, including Texas, New Mexico, and North Dakota. The firm plans to tap natural gas from those regions for running its mining operations. They are currently diverting about 10 million cubic feet of natural gas daily.
A 2019 Cambridge study of 280 Bitcoin companies reported that they powered up to 39% of their mining operations through renewable energy. In regions with more giant hydroelectric dams like China, some miners leverage the energy that would otherwise go to waste.
Gazprom, the Russian-state-owned natural gas company, has a division that sells the power generated from flare gas to Bitcoin miners. Flare gas is a waste byproduct of oil and gas drilling and processing that often gets released into the air.
Other Green Alternatives
Many leading crypto exchanges, such as https://bitcoin-storm.live/, are exploring energy-efficient transaction methods to reduce the industry's carbon footprint. A Canadian start-up uses the heat generated from Bitcoin mining hardware to raise cold-water fish and grow plants like lettuce and basil in more sustainable ways.
Although it will take some time to realize the projected gains, the above discussion proves Bitcoin can become green. However, the world needs further research to determine the most effective ways of making Bitcoin sustainable in the future.