Cryptocurrency has seen a huge rise in popularity. Many investors, from large companies to individuals, are putting money into digital currencies. These currencies, powered by new technologies like blockchain, are now a key part of the global financial system. Some even believe they could change how we use money.
However, this exciting market has a hidden side. New research by United Nations scientists shows that mining cryptocurrencies can greatly harm the environment. This includes impacts on climate, water, and land.
Bitcoin's Environmental Footprint
Bitcoin is the most well-known cryptocurrency. UN scientists studied its environmental effects in 76 mining nations during 2020 and 2021. The findings are concerning. Bitcoin mining creates a large carbon footprint. It also uses a lot of water and land.
Professor Kaveh Madani, who led the study, noted that new technologies often have unexpected downsides. He believes these findings should lead to better regulations and technology. This will help improve the financial system without hurting the environment.
Energy Consumption and Carbon Emissions
From 2020 to 2021, the global Bitcoin mining network used 173.42 Terawatt hours of electricity. This is a massive amount of energy. If Bitcoin were a country, its energy use would rank 27th globally. This is more than countries like Pakistan, which has over 230 million people.
This energy use led to a carbon footprint equal to burning 84 billion pounds of coal. It is also like running 190 natural gas power plants. To cancel out this carbon, we would need to plant 3.9 billion trees. This area would be almost as big as the Netherlands, Switzerland, or Denmark. It is also 7% of the Amazon rainforest.
Water and Land Use
Bitcoin mining also has a significant water footprint. In 2020-2021, it used enough water to fill over 660,000 Olympic-sized swimming pools. This amount could meet the daily water needs of more than 300 million people in rural sub-Saharan Africa.
The land used for worldwide Bitcoin mining during this period was also substantial. It covered an area 1.4 times the size of Los Angeles.
Reliance on Fossil Fuels
The UN scientists found that Bitcoin mining mostly uses fossil fuels. Coal makes up 45% of Bitcoin's energy mix. Natural gas accounts for another 21%. Hydropower, a renewable source with its own environmental impacts, provides 16% of Bitcoin's electricity. Nuclear energy has a 9% share. Solar and wind energy provide only 2% and 5% respectively.
China was the largest Bitcoin mining nation. Its coal-heavy operations in 2021-2022 had a huge carbon footprint. To offset this, about 2 billion trees would need planting. This area is equal to Portugal and Ireland combined.
The top 10 Bitcoin mining nations in 2020-2021 included the United States, Kazakhstan, Russia, Malaysia, Canada, Germany, Iran, Ireland, and Singapore. These countries are responsible for 92-94% of Bitcoin's global carbon, water, and land footprints.
A Call for Action
Dr. Sanaz Chamanara, the study's lead author, explained that the environmental impact varies by country. This is because different nations use different energy sources for electricity. Countries like Norway, Sweden, Thailand, and the United Kingdom also have high water or land footprints from Bitcoin mining.
The UN scientists suggest governments take action. They recommend monitoring and reducing the environmental impacts of cryptocurrencies. They also advise investing in more energy-efficient digital currencies. The study also highlights the unfairness of who benefits from Bitcoin mining versus who suffers from its environmental effects.
Key Takeaways
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Cryptocurrency has significant, often overlooked, environmental impacts.
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Bitcoin greatly affects climate, water, and land.
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Bitcoin's price and its energy use are closely linked. A 400% price increase from 2021 to 2022 led to a 140% jump in energy use.
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Most electricity for Bitcoin mining (67%) comes from fossil fuels. Coal is the biggest source at 45%.
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Bitcoin mining produced over 85.89 million tons of CO2 from 2020 to 2021. This alone could push global warming past the Paris Agreement's goal.
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Only a small percentage of Bitcoin's energy comes from solar (2%) and wind (5%).
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The global water footprint of Bitcoin mining in 2020-2021 was 1.65 cubic kilometers.
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The land footprint was over 1,870 square kilometers.
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Countries with cheap electricity, like Kazakhstan, attract Bitcoin miners, increasing reliance on non-renewable energy.
Urgent action is needed. This includes new rules and technological advances. These steps can help reduce the environmental harm from the fast-growing digital currency sector.