Bitcoin is a Disaster for the Environment: Can Things Improve?

Whether you’ve been investing in Bitcoin for years or are new to the game, one thing’s for sure, the cat’s out of the bag about the shocking environmental impact of this cryptocurrency. Some financial commentators have even called Bitcoin the new “Blood diamond,” scaring off ethical investors, and for good reason.

Often overlooked, many investors were entirely unaware that Bitcoin (and several other cryptocurrencies) produces more carbon emissions annually than some countries and could, on its own, cause significant global warming. As of today, it’s hard to justify buying Bitcoin if you want to join in the fight against climate change.

Financial advisors might be giving the green light to invest in Bitcoin but is there a more sustainable way to invest in cryptocurrencies?

Why Bitcoin is not a green currency (yet)

Bitcoin and other cryptocurrencies are decentralized and rely on the processing of complicated mathematical transactions. All that computing power takes a toll.

Here are 5 shocking facts about Bitcoin’s environmental impact:

1. Bitcoin processing requires as much energy as a small country!

Bitcoin currently consumes a staggering 45.8 TWh annually, or about the same amount of electricity as Jordan or Sri Lanka. In 2019, Bitcoin mining used about the same amount of electricity as the Netherlands.

2. Most of the power comes from coal

Most Bitcoin mining happens in Asia (68%), and most of the energy used to power Bitcoin transactions and mining comes from coal-fired power stations in China. Not very green, though some companies are trying to greenwash use of this dirty electricity by noting that several energy companies in China use ‘spare’ energy to mine cryptocurrencies in order to prevent energy from giant overcapacity power plants from being wasted.

3. Bitcoin is responsible for huge amounts of greenhouse gas emissions

In 2019 alone Bitcoin accounted for an estimated 22-22.9 million metric tons of C02 emissions. That’s about equivalent to 5 million cars being driven for a year.

4. It would take more than 28 million acres of forest to sequester Bitcoin’s carbon emissions

Bitcoin’s associated greenhouse gas emissions are comparable to the total emissions of Kansas City, Vienna, or Hamburg and would need a staggering 28 million or more acres of forest to sequester all that carbon.

5. “Bitcoin emissions alone could push global warming above 2°C”

That’s the title of a paper published in the journal Nature in 2018. The authors raised concerns that projected Bitcoin usage could singlehandedly produce enough CO₂ emissions to push global warming above 2 degrees Celsius before 2050.

This level of warming is considered a point of no return for climate change as the Arctic tundra or permafrost would melt and wildfires would rage out of control, throwing further carbon into the atmosphere in a self-perpetuating cycle.

Bearish on Bitcoin?

That’s understandable, given what we just saw about the environmental impact of the cryptocurrency.

Here are 4 pieces of better news about cryptocurrencies, Bitcoin and the environment:

1. Some newer cryptocurrencies are far more energy efficient than Bitcoin, such as Cardano, Polkadot and Algorand – Cardano’s cryptocurrency network consumes only 6 GWh of power.
2. Half of small miners are interested in using more environmentally-friendly power sources, along with 36% of large miners (and 25% of small miners are open to the idea of switching to a less energy-intensive consensus algorithm).
3. Green Bitcoin mining companies are popping up, such as Pow.re, which is located in the Canadian subarctic and runs on hydropower.
4. Bitcoin still only uses half as much energy as is consumed by inactive home appliances in the US – unplugging inactive phone chargers, microwaves, TVs, and other devices could power the whole Bitcoin network for two years!

So, if you’re thinking of investing in Bitcoin but are worried about the climate impact, consider looking for green Bitcoin investments where mining operations take place in Canada or through a sustainable operation. And offset your investment emissions by unplugging your computer, tablet, and phone charger once you’re done.