The environmental impact of BTC mining has been discussed for several years. However, in recent months, this has become a hot-button topic. The reason for this was the seemingly innocent tweet of Elon Musk, who wrote about his concern that crypto mining is too expensive for the environment.
Musk also said that Tesla quits accepting Bitcoin for the purchase of electric vehicles, and triggered the process of the first cryptocurrency historic fall. In a matter of days, digital gold lost 40% of its value.
And then it turned into the domino effect: Greenpeace stopped accepting donations in the first cryptocurrency, Huobi refused to host equipment in mainland China, and the Xinjiang authorities completely banned mining in the region.
But is Bitcoin mining really so dangerous? Let's figure it out.
How bad is mining?
The Cambridge Center for Alternative Finance (CCAF) estimated that Bitcoin mining requires 97.90 TWh of electricity per year. This is slightly less than the energy needed to supply the Netherlands with energy for the same period.
Source: Cambridge Center For Alternative Finance.
At the same time, Bank Of America, in its review called Bitcoin's Dirty Little Secrets, described that the Bitcoin network emits 60 million tons of carbon dioxide into the atmosphere when mining one coin – the same as Greece in a year. Moreover, every inflow of $1 billion into the first cryptocurrency is driving the same growth in CO2 emissions as the 1.2 million combustion engine cars. But after all, factories, all kinds of thermal power plants, and conglomerates of enterprises are emitting even more ... Or not?
Let's try to understand if the above-described accusations have ground and whether Bitcoin mining is actually harmful to the environment.
As we wrote above, the most frequent attack on Bitcoin is the huge consumption of electricity, which leads to harmful CO2 emissions into the atmosphere. However, look at the following data.
Galaxy Digital studied the annual electricity costs required for mining, gold mining, banking and monetary services. The graph speaks for itself:
Source: “On Bitcoin's Energy Consumption: A Quantitative Approach to a Subjective Question,” Galaxy Digital.
It turns out that servicing banks and on gold mining needs much more electricity than BTC mining. However, eco-activists and crypto critics don’t focus on this.
Moreover, many miners consider their activity using traditional tools unjustified, because they have more expenses than income. Thus, more and more specialists are using ecological mining based on renewable energy sources.
In 2019, CCAF conducted a survey and found that almost 80% of miners use renewable energy to mine digital assets. And the share of "green" energy, in particular hydropower, is 39%.
Source: Myera Group.
Miners from the Icelandic Genesis Mining Enigma center operate on the thermal energy of the Earth, and the Moonlite Project team has developed a system of “smart” electricity use based on machine intelligence. Canada's Heatmine uses the heat generated by ASIC miners in greenhouses to grow strawberries, while the Myera Group heats water to raise fish in tanks. In Japan, surplus energy from solar collectors is used for mining.
The conclusion is simple – Bitcoin mining doesn’t cause devastating harm to the environment, unlike banks and other institutions, whose offices are usually located in densely populated centers. Moreover, more and more miners are striving to make crypto mining completely “green”.
Some crypto critics argue that BTC mining harms the health of people who install ASIC mining farms in their own apartments and houses. However, in terms of the level of human exposure, computer technology slightly surpasses the refrigerator. The impact of a router or smartphone is even much stronger than the one from a stationary computer.
Mining farms generate a lot of heat, and this can really affect a person's well-being. However, all that is needed to neutralize the negative impact is simply to ventilate the room more often or install a powerful cooling system.
Let's not argue that ASICs, which coolers disperse dust and make noise all day, don’t bring much joy. But they don’t carry a direct danger to life, so mining can be safely considered a harmless activity.
Does mining destroy the video cards and hardware of crypto enthusiasts? Nope.
Cryptocurrency mining does no more harm to the video card than top-notch console games. Electronics cannot work without problems for ten years if there are no parts that can withstand the effects of unusual conditions, for example, constant overheating.
Yes, mining wears out mechanical fans in hardware much faster, but luckily it’s one of the cheapest and easiest parts to replace.
Green Mining vs. Staking
“Green” or ecological mining is already a reality because the miners in the conditions of stiff competition strive to find the cheapest energy. And it happened that alternative sources are just the right choice.
Distribution of energy resources of miners by region. Source: Visual Capitalist.
Eco-mining has every chance of becoming a good solution not only for the environment but for humanity. The use of surplus electricity and the development of "green" methods of production will reduce the cost of energy several times. And the migration of miners to countries that are not rich, but profitable for the production of cryptocurrencies, can have a positive effect on their economy.
In the meantime, the process of switching to ecological crypto mining is just starting, and the best existing alternative to it is staking, proposed by Vitalik Buterin, founder of Ethereum.
Within the discussion of BTC mining, Buterin expressed the opinion that the first cryptocurrency needs to improve its energy efficiency. Otherwise, it risks leaving the digital assets’ top. He also didn’t miss the chance to remind that the new version of the Ethereum blockchain, running on the Proof-of-Stake algorithm, will significantly reduce energy consumption, because the income of crypto enthusiasts will depend on the amount of currency in the wallet, and not the performance of its equipment.
Critics' arguments are often exaggerated because many of them have no understanding of how cryptocurrencies work. Undoubtedly, BTC can hardly be called energy efficient – its mining consumes huge resources. But this provokes those who sharply deny digital assets: for them, Bitcoin will always be perceived as an environmental disaster or a sub-payment system.
Myths and prejudices continue to slow down the massive adoption of digital assets, but despite this, the crypto industry continues to grow rapidly, introducing progressive solutions. They will make mining more decentralized and “clean”. And this is the future of our world.
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