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What is Bitcoin’s Actual Carbon Footprint?

Bitcoin’s carbon footprint is often cited as one of the reasons not to invest in the cryptocurrency by its detractors and critics. While the energy intensive nature of Bitcoin is also part of the same debate, it doesn’t have the same statistical convincing power as in the case of carbon footprint. The reason is that the carbon footprint in the currency yardstick to measure the sustainable nature of any entity. But, despite what may appear, Bitcoin’s carbon footprint is not as big as it seems.

The main electricity usage in the case of Bitcoin is in the mining process. Mining uses actual Proof of Work (PoW) algorithm called SHA-256 for hashing purposes. It is an energy intensive process as Bitcoin is divided among users based on their computing input to the system. The more computing power a person inputs, the more energy the system will use. If the total hash power keeps on increasing due to competition, the total energy consumed will also keep increasing if mining technology remains stagnant. Some alternative theorists therefore attach importance to the development of a less energy intensive processes like Proof of Stake (PoS) mining that involves locking coins together and generating new blocks as a kind of random event. PoS mining is however, still in its infancy and isn’t a reliable alternative process right now.

Why Bitcoin is moving to Sustainable Energy on its own?

However, lets face it: Bitcoin mining is energy intensive and the total hash power keeps increasing. The network is consuming electricity at the level of medium sized countries now. But, what about the actual carbon footprint? Before diving into the debate, rest assured that Bitcoin’s actual carbon footprint is probably a lot lower than the total energy consumed in Kwh units versus the average carbon emitted from one unit. It is because electrical power is expensive when it is made by fossil fuels and cheaper in case of dams, nuclear fission and less conventional modes of electricity generation. Bitcoin miners can only go for cheaper electricity because electricity costs are substantial in finding out the profitability factor for these miners and they simply cannot survive on expensive electricity that is joining the national grids from more expensive coal and fuel-fired power plants. The is the reason why most of the miners have mushroomed around the biggest hydro power producing areas around the world with low population. In these remote areas, power consumption is low, power generation is high and because of hydel approach, it is extremely cheap as well.

One can see in Canada, Iceland, US territories, Eastern Europe, Russia, etc that due to the free market dynamics to of trying to access the cheapest electricity, miners are moving automatically to the vicinity of the hydel power plants around the world. Even in China where Bitcoin itself is banned and strangely, mining isn’t much of the Bitcoin mining process is installed in the vicinity of huge power projects in remote areas. This is the reason why during the monsoon season with dams full, the total hash rate can climb to as much as twice of the dry season itself over the years. Hydel power plants have some the lowest carbon footprints in the world.


But, at the same time since miners draw their electricity from the grid, it becomes very difficult to accurately say which percent of their nationalized electricity is from which source as they are all mixed together to become a part of the national supply system. For example in China, there are many hydel power plants that drive the economy but there are considerable numbers of coal-based power plants as well that are big, dirty and extremely danger to the environment because of the carbon footprint.

Some short sighted studies mainly from anti-cryptocurrency sectors have declared that cryptocurrencies are a threat to the environment because they have the same carbon footprint like the entire country of Bangladesh but their calculations are false because as discussed above, Bitcoin miners automatically have to move to more sustainable sources otherwise their operations can’t remain competitive enough. So, that calculation is out of the window.

However, one more concrete study done by the Technical University of Munich (TUM), Germany’s no. 1 university in technology states that Bitcoin is likely to be producing 22 mega tonnes of carbon dioxide on a yearly basis. This is the same level as that of a mid-sized city like Las Vegas or Vienna according to the research. While this is not as high as previous fear mongering calculations by other researchers it is still considerable considering the future of the planet and efforts should be made to bring it down further. But, by no means Bitcoin alone is to blame in the financial industry as let us take a look what others are doing.

The banking industry and minting regulators cut millions of trees every year to print the paper currency as well as using equipment, automobiles and other carbon emitting measures. While there is not concrete research in this area, it is expected that hundreds of thousands of banks, their money vans, security, minting, management, etc costs the planet probably a lot more than what Bitcoin costs right now. However, to be fair Bitcoin network is only worth $140 billion right now while the total reserves of the world are around $500 trillion so there is a considerable size gap regarding their existence. If Bitcoin grows at the rate being experienced right now, it will definitely increase its carbon footprint many times over in the near future, thus causing further concerns on its sustainability and such.


So, while the Bitcoin industry needs to introspect and voluntarily move to clean and green energy sources only, it is also important to understand that the industry is already moving to that as the quest for cheap electricity will always move the sector to sustainable sources and not away from them. They simply cannot afford to move away from them. So, hopefully it is expected that the carbon footprint of the sector will further decrease dramatically in the coming years and eventually become carbon neutral for the future sustainability purposes.

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Talha Dar

Talha Dar

Cryptocurrency and blockchain enthusiast. Working on free economy and borderless solution side of things. Live and breathe crypto!


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