Although Bitcoin is volatile, the popularity of Bitcoin has grown over the last few years. Various people claim that Bitcoin is going to be the future of finance because of the popularity of this cryptocurrency. Other than that, it can also be beneficial for promoting a sustainable lifestyle. Though people happen to be claiming that Bitcoin’s growth negatively is impacting the environment, however, the truth of this fact still remains skeptical.
What is the Impact of Cryptocurrency on the Environment?
As per studies, Bitcoin happens to consume 0.34% of the overall electricity produced. This amount of energy consumed by Bitcoin as a cryptocurrency is higher than the electricity required to power all the tea kettles in the United Kingdom for 19 years. But, what is the reason behind this? Why does Bitcoin consume so much energy? The answer to this question dates back to its virtual nature of a currency. It indicates that Bitcoin happens to be controlled by leveraging a massive network of computers.
Generally, Bitcoin miners work these computers for getting rewarded with Bitcoin. As these machines can process up to approximately 5 transactions in one second, they require a lot of power to work. However, does it negatively impact the environment? The answer entirely depends on the power policies in various nations and not only the software structure of Bitcoin.
A Few Examples
- Canada utilizes hydroelectric energy for generating a massive percentage of power. Other than that, Quebec, one of Canada’s provinces, generates approximately 95% of its power from hydroelectric energy. Moreover, the power costs are also low. This helps lower the carbon footprint of the country, thereby putting less negative effects on the environment.
- Bitcoin miners in Iceland find it favorable to mine Bitcoin because of its low power costs and temperatures. The country generates a massive percentage of its power from the sources of geothermal energy. Compared to coal-fired or gas plants geothermal energy, sources do not negatively affect the environment, thereby emitting less carbon.
Why There is a Disagreement Over the Carbon Footprint of Bitcoin?
The massive discrepancy between the competing analysis of Bitcoin energy utilization is because of the fact that Bitcoin miners use less efficient and older equipment and are likely to utilize more energy to mine the identical Bitcoin, a factor that only can be analyzed and not calculated.
We have the knowledge about the computing power utilized for mining Bitcoin, but we do not know how much power is being utilized for generating that desired computing power. The most advanced hardware happens to be super-efficient, however, not all are using that.
According to studies, a bitcoin farm can basically be defined as a collection of miner boxes that happens to be connected to and plugged on the internet. Usually, it resembles a data center.
Other than hardware efficiency, the energy and electricity source power in a bitcoin farm ultimately happens to be determining the overall negative environmental effect of cryptocurrency mining.
You might find Bitcoin mines that essentially have zero carbon footprint out there as they rely on clean power or take advantage of additional power generation during off-peak hours.
The main thing to keep in mind about power highlights that it happens to be impossible to store in a large amount, yet hydroelectric or geothermal energy generation remains constant. So, if you do not utilize that additional power it is simply going to disappear.
Is There Any Other Energy-Consuming Cryptocurrency Apart From Bitcoin?
In short, the answer to this question is yes. Bitcoin is not the only cryptocurrency that happens to be mined. As per experts, while mining the coin of Ethereum, Ether utilizes 36.8 TWh of power every year. Though this amount is pretty less than Bitcoin, however, it is higher than the power consumption of the entire Bulgaria nation. The energy consumption of Ethereum also remains on a steep upside trend, thereby leading to the rise of the price of Ether every year.
Exit Plan: Ethereum 2.0
Unlike Bitcoin, Ethereum possesses an exit plan. Ethereum 2.0 is going to shift from the present energy-intensive proof of work mechanism utilized by both Bitcoin and Ethereum, thereby not requiring mining. The present idea highlights carefully changing Ethereum 1 so that it works without significant disruption to users within the emerging proof-of-stake Ethereum 2.0.
While proof of work can be considered as challenging, proof of stake highlights putting everyone’s names within a virtual fishbowl and analyzing to check who wins the ultimate digital lottery. While the system will still demand electricity, it is possibly 1/100th of the amount utilized for mining. Unlike Bitcoin, the perspective of mining Ethereum in the next five years remains quite doubtful.
Is Bitcoin Mining Eco-Friendly?
The straight answer to this question is yes. Fiat currency requires people to oversee its allocations, money printing resources, and checking fraud services among various other things. These increase the overall environmental footprint. On the contrary, the enhanced Bitcoin utilization can decrease this footprint.
You only require internet computers and power while using Bitcoin. Apart from that, the enhanced utilization of Bitcoin is likely to reduce paper pollution to a great extent.
When a trader uses Bitcoin, he or she might require a bitcoin wallet other than a bank branch. The trader will use this wallet for getting all the essential information from the branch of a bank. Due to this he or she will be required to visit the bank branches for receiving paper statements whenever they need essential data. Thus, less environmental pollution will guide less paper usage.
What Makes the Bitcoin Environment Friendly and What Are the Outputs?
Bitcoin coin makes consumerism quite expensive and this is something that makes this cryptocurrency environmentally friendly. When you take a glance at the price chart of Bitcoin, you are likely to notice that Bitcoin happens to be a deflationary currency. Thus, you will be more than enthusiastic to spend your Fiat currency as it happens to be inflationary, thereby saving Bitcoins.
If you happen to be a bitcoin miner, you will generally not purchase nonessential items because of this. Due to this, there will be less energy consumption. Apart from this, mining Bitcoin also encourages Bitcoin miners to look for eco-friendly energy as the computation numbers they make are entirely dependent on power. It is one of the biggest benefits of Bitcoin for our environment.
These days, solar energy and hydroelectric power happen to be the cheapest methods of producing such kind of electricity. As the sources produce additional electricity, they can decrease the cost of renewable energy production. So, with the increase of Bitcoin, there will be an increase in solar and hydroelectric power generation.
Cryptocurrency and Environment: Wrapping Up
Bitcoin is working quite fine these days, apart from the disagreement due to carbon footprint. But, there have also been claims that Bitcoin harms the environment. It is associated with the energy amount consumed when Bitcoin is being mined. Ultimately, everything boils down to the ultimate source of energy, and countries using renewable energy resources will not experience the negative impact of Bitcoin mining on the environment.