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16.07.2025
Footprint of bitcoin mining
Since the introduction of bitcoin in 2009, a boom in cryptocurrencies was faced by the world partly due to the exponential growth in the value of bitcoin, as well as the emergence of new cryptocurrencies that, while the vast majority of them do not have the same impact as bitcoin, are still an indication relevant and standard use of this currency as investment and means of transaction.
Cryptocurrencies are becoming more popular and their turnover is growing as a large number of people have accumulated large sums of money through cryp- tocurrency mining. However, few people talk about the impact they have on the environment, so my aim in this paper will be to evaluate these effects and propose measures to address them.
Before I continue, it should be clarified that as I mentioned before, there are many cryptocurrencies in the world today besides Bitcoin, such as Ethereum, Binance Coin, Tether, Cardano, and many others, however, in this paper I will focus on Bitcoin because this cryptocurrency and Ethereum account for more than 60% of the market capitalization of crypto-assets. However, while Ethereum percentage of power consumption is 20 to 39% of the total consumption of crypto-assets, bit- coin percentage of consumption is 60 to 77 % (White House, 2022).
So, because of bitcoin’s higher power consumption, I will only focus on this cryptocurrency. This does not mean that the others do not pollute or that they are more environmentally friendly (with some exceptions, I will address later). The fact is that bitcoin is the most popular cryptocurrency that at the same time pollutes the environment more than others.
First, I would like to consider the question of how this cryptocurrency is gener- ated, which requires understanding what exactly bitcoin is and, more importantly, how “mining” bitcoin is performed, since it is this process that affects the environ- ment, not the cryptocurrency itself.
Bitcoin operates through the blockchain system that consists of a decentral- ized database acting as a sort of public financial registry. The information gener- ated in this database is stored on multiple computers connected to each other via the Internet and is upd ated online (Iberdrola, no date).
Blockchain works “by solving complex cryptographic problems to validate transactions or records” (Artiga and López, 2021). This confirmation process is based on consensus because all users of the network have access to the same information, hence everyone can confirm its validity. This system allows data to be recorded in unique blocks of information, making it easier to retrieve and confirm the same at any time (Iberdrola, no date).
The structure of the blockchain includes a bitcoin mining system called Proof of Work (POW) that works as follows: all computers mine bitcoins to see at the same time who will be the first to solve one of the possible cryptographic problems se t by the Bitcoin program, and the first person who manages to record a transaction gets bitcoin as a reward, and the more people competing for bitcoin, the more difficult problems they should solve to get more bitcoins as a reward (Iberdrola, no date).
As cryptographic tasks to be solved become more complex, there comes a need for computers and special equipment that consume large amounts of power to operate competitively (Jones, Goodkind and Berrens, 2022). At the same time, only one out of thousands of possible nodes will mine bitcoin, meaning that one computer will get the reward, the rest will only waste a large amount of power (Artiga and López, 2021).
There is so much power being consumed that, for example, in 2020, approxi- mately 75.4 TWh/year was consumed for bitcoin mining. This number does not tell us anything, but it is very impressive when you consider that the energy consump- tion of bitcoin mining was higher than that of entire countries such as Austria (69.9 TWh/year) or Portugal (48.4 TWh/year) over the same period (Jones, Goodkind and Berrens, 2022).
One might ask: what energy sources are used to generate so much power in bitcoin mining? While 39% of POW is produced using renewable sources, the remaining 61% is produced using non-renewable energy sources such as fossil fuels (Jones, Goodkind and Berrens, 2022).
Bitcoin is estimated to have produced 3 to 13 million cubic tons (MT) of car- bon between 2016 and 2018 (Krause and Tolaymat, 2018), which is equivalent to the emissions of small countries like Uruguay (6.51 MT), Senegal (10.68 MT) or Slo- venia (12.47 MT) in 2020 (World Bank, no date).
Even the use of renewable energy does not protect the environment from the harmful bitcoin, as hydroelectricity is the most used renewable energy source in
bitcoin mining, but it consumes a lot of water, so that due to the evaporation of liquid in power generation, it is estimated that 1.65 km³ of water was lost between 2020 and 2021, equivalent to 660,000 Olympic swimming pools (Chamanara, Ghaffarizadeh and Madani, 2023).
To end this essay positive, here are a number of possible measures by which cryptocurrency mining could be either prevented or, if this is not possible, the envi- ronmental impact of cryptocurrency mining could be reduced.
For example, governments of major bitcoin mining nations could take regulatory measures to discourage cryptocurrency mining, such as raising power prices for individuals or companies that are mining bitcoins, impos- ing taxes on cryptocurrency transactions, prohibiting mining for which non-renewable and polluting sources are used, etc. (Chamanara, Ghaffarizadeh and Madani, 2023).
Use of Proof of Stake system should also be encouraged. Broadly speaking, POS is a consensus-based system within a group of validators (who should prove that they own a certain amount of cryptocurrencies to be selected) chosen at ran- dom and responsible for validating blocks in the blockchain as well as transactions in exchange for a commission (Investopedia, 2023).
POS is a more environmentally-friendly system because blocks are val- idated by consensus rather than by solving a cryptographic problem as in the case of POW, eliminating the competition that causes so much useless energy to be generated. In addition, validators at POS do not need to have the large-scale energy-intensive equipment necessary to mine bitcoin, they only need to prove that they have the minimum amount of cryptocurrencies necessary to become validators (Investopedia, 2023).
So-called “green” cryptocurrencies based on the POS system already exist, so spreading this type of crypto-assets and government incentives to use them instead of POW-based cryptocurrencies could be another measure to mitigate the environmental impact of cryptocurrency mining. Examples of green cryptocurren- cies include Cardano, Solarcoin, Nano, Algorand, and Bitgreen (Cryptomus, 2024). In conclusion, utilizing existing and future information and communication technologies is not a bad thing. Nevertheless, as we can conclude from our essay, it is important that their use be regulated, since everything that happens in the digital world affects our real life in its own way and has different kinds of consequences,
such as the environmental impact addressed in this article.
Cryptocurrencies are becoming more popular and their turnover is growing as a large number of people have accumulated large sums of money through cryp- tocurrency mining. However, few people talk about the impact they have on the environment, so my aim in this paper will be to evaluate these effects and propose measures to address them.
Before I continue, it should be clarified that as I mentioned before, there are many cryptocurrencies in the world today besides Bitcoin, such as Ethereum, Binance Coin, Tether, Cardano, and many others, however, in this paper I will focus on Bitcoin because this cryptocurrency and Ethereum account for more than 60% of the market capitalization of crypto-assets. However, while Ethereum percentage of power consumption is 20 to 39% of the total consumption of crypto-assets, bit- coin percentage of consumption is 60 to 77 % (White House, 2022).
So, because of bitcoin’s higher power consumption, I will only focus on this cryptocurrency. This does not mean that the others do not pollute or that they are more environmentally friendly (with some exceptions, I will address later). The fact is that bitcoin is the most popular cryptocurrency that at the same time pollutes the environment more than others.
First, I would like to consider the question of how this cryptocurrency is gener- ated, which requires understanding what exactly bitcoin is and, more importantly, how “mining” bitcoin is performed, since it is this process that affects the environ- ment, not the cryptocurrency itself.
Bitcoin operates through the blockchain system that consists of a decentral- ized database acting as a sort of public financial registry. The information gener- ated in this database is stored on multiple computers connected to each other via the Internet and is upd ated online (Iberdrola, no date).
Blockchain works “by solving complex cryptographic problems to validate transactions or records” (Artiga and López, 2021). This confirmation process is based on consensus because all users of the network have access to the same information, hence everyone can confirm its validity. This system allows data to be recorded in unique blocks of information, making it easier to retrieve and confirm the same at any time (Iberdrola, no date).
The structure of the blockchain includes a bitcoin mining system called Proof of Work (POW) that works as follows: all computers mine bitcoins to see at the same time who will be the first to solve one of the possible cryptographic problems se t by the Bitcoin program, and the first person who manages to record a transaction gets bitcoin as a reward, and the more people competing for bitcoin, the more difficult problems they should solve to get more bitcoins as a reward (Iberdrola, no date).
As cryptographic tasks to be solved become more complex, there comes a need for computers and special equipment that consume large amounts of power to operate competitively (Jones, Goodkind and Berrens, 2022). At the same time, only one out of thousands of possible nodes will mine bitcoin, meaning that one computer will get the reward, the rest will only waste a large amount of power (Artiga and López, 2021).
There is so much power being consumed that, for example, in 2020, approxi- mately 75.4 TWh/year was consumed for bitcoin mining. This number does not tell us anything, but it is very impressive when you consider that the energy consump- tion of bitcoin mining was higher than that of entire countries such as Austria (69.9 TWh/year) or Portugal (48.4 TWh/year) over the same period (Jones, Goodkind and Berrens, 2022).
One might ask: what energy sources are used to generate so much power in bitcoin mining? While 39% of POW is produced using renewable sources, the remaining 61% is produced using non-renewable energy sources such as fossil fuels (Jones, Goodkind and Berrens, 2022).
Bitcoin is estimated to have produced 3 to 13 million cubic tons (MT) of car- bon between 2016 and 2018 (Krause and Tolaymat, 2018), which is equivalent to the emissions of small countries like Uruguay (6.51 MT), Senegal (10.68 MT) or Slo- venia (12.47 MT) in 2020 (World Bank, no date).
Even the use of renewable energy does not protect the environment from the harmful bitcoin, as hydroelectricity is the most used renewable energy source in
bitcoin mining, but it consumes a lot of water, so that due to the evaporation of liquid in power generation, it is estimated that 1.65 km³ of water was lost between 2020 and 2021, equivalent to 660,000 Olympic swimming pools (Chamanara, Ghaffarizadeh and Madani, 2023).
To end this essay positive, here are a number of possible measures by which cryptocurrency mining could be either prevented or, if this is not possible, the envi- ronmental impact of cryptocurrency mining could be reduced.
For example, governments of major bitcoin mining nations could take regulatory measures to discourage cryptocurrency mining, such as raising power prices for individuals or companies that are mining bitcoins, impos- ing taxes on cryptocurrency transactions, prohibiting mining for which non-renewable and polluting sources are used, etc. (Chamanara, Ghaffarizadeh and Madani, 2023).
Use of Proof of Stake system should also be encouraged. Broadly speaking, POS is a consensus-based system within a group of validators (who should prove that they own a certain amount of cryptocurrencies to be selected) chosen at ran- dom and responsible for validating blocks in the blockchain as well as transactions in exchange for a commission (Investopedia, 2023).
POS is a more environmentally-friendly system because blocks are val- idated by consensus rather than by solving a cryptographic problem as in the case of POW, eliminating the competition that causes so much useless energy to be generated. In addition, validators at POS do not need to have the large-scale energy-intensive equipment necessary to mine bitcoin, they only need to prove that they have the minimum amount of cryptocurrencies necessary to become validators (Investopedia, 2023).
So-called “green” cryptocurrencies based on the POS system already exist, so spreading this type of crypto-assets and government incentives to use them instead of POW-based cryptocurrencies could be another measure to mitigate the environmental impact of cryptocurrency mining. Examples of green cryptocurren- cies include Cardano, Solarcoin, Nano, Algorand, and Bitgreen (Cryptomus, 2024). In conclusion, utilizing existing and future information and communication technologies is not a bad thing. Nevertheless, as we can conclude from our essay, it is important that their use be regulated, since everything that happens in the digital world affects our real life in its own way and has different kinds of consequences,
such as the environmental impact addressed in this article.
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