Over the past few years, we have heard multiple allegations that Bitcoin is a threat to our environment. More specifically, the amount of energy and electricity required to keep the network operational is pretty astonishing. While the price of Bitcoin is going up to accommodate these increasing costs, it is evident there are serious concerns about the way this network operates.
Bitcoin is not Exactly Eco-friendly
While no one can deny that Bitcoin is a phenomenon unlike anything the world has ever seen before, it is not perfect either. Not only does the currency lack fungibility, privacy, anonymity, and scalability, but it’s also power-hungry in many ways. One needs dedicated, expensive hardware to keep the network chugging along, and the electricity costs required to do so are becoming more epic in proportion every single year. Right now, the Bitcoin network consumes as much electricity per day as does the country of Ireland.
It may seem crazy to compare Bitcoin’s electricity requirements with those of an entire country. However, it also shows why the proof-of-work algorithm used by Bitcoin gets so much negative attention from environmentalists all over the world. For a network incapable of processing even a fraction of Visa’s workload, the costs to operate it are incredibly steep. Then again, the miners who support the network are paid out in Bitcoin, which has netted impressive gains throughout 2017.
Recent statistics indicate that every Bitcoin transaction requires around 245 kWh to process, which is equivalent to around 3,200 hours of watching television. The Bitcoin network consumes a total of 70.5 million kWh per day, and almost 27 TWh – that’s terawatt-hours – per year. These numbers are staggering, especially for a new form of money most people still show no interest in using whatsoever.
None of these statistics are working in favor of Bitcoin, yet not everything is black and white. It would be easy to classify the world’s leading cryptocurrency as a pure threat to our environment, but it is difficult to say if that is truly the case. It all comes down to how the electricity used to mine Bitcoin is generated in the first place. Over the years, we have seen more companies switch to hydropower or even geothermal energy. These renewable energy sources cause far less pollution and are considered eco-friendly.
For the time being, it is impossible to gauge the true environmental impact of Bitcoin mining. One could always make the argument that this electricity could be used for other purposes, but the same could be said for virtually any other industry requiring a lot of electricity every single day. It is certainly true that this power consumption is increasing, as one Bitcoin transaction now consumes enough energy to power an entire household for almost a week. This is a very worrisome statistic, but it doesn’t constitute a threat to our society as a whole by any means.
Moreover, there is no real alternative to the status quo that would make a lot of sense. Proof-of-stake has often been touted as a viable option, but it is inherently insecure in every form we have come across so far. Bitcoin’s electricity usage is getting out of hand, but it’s not taking away energy from mainstream consumers by any means. Nor is it necessarily harmful to our environment either. Discussions like these will become more common over the coming years. In the end, it seems unlikely we will see Bitcoin move away from its current proof-of-work algorithm.