Cryptocurrency mining has had an impact across a multitude of fields; everything from currency regulation to graphics card pricing. And now, we're seeing yet another impact of this revolution; Bitcoin's recent surge in value has caused electricity consumption to rise worldwide as people all over the globe are bringing more computers online to mine the digital currency. With prices where they are now, cryptocurrency analyst Alex de Vries estimates Bitcoin miners could burn through 24 terawatt-hours of electricity, annually solving progressively difficult cryptographic puzzles to "mine" more Bitcoins, and still turn a profit. To put that amount of electricity in perspective, Nigeria has a population of 186 million people, and that's about what the entire country uses in one year.
The energy used by miners averages out to a massive 215 kilowatt-hours (KWH) used for each Bitcoin transaction, with about 300,000 transactions occurring each day. The average American household consumes 901 KHh per month, so every Bitcoin exchange creates enough electricity to run a normal sized household, and everything inside, for nearly a week. To extrapolate that, De Vries' index estimates Bitcoin miners worldwide are using enough voltage to power over two million American households.
Bitcoin's electricity consumption is higher than digital payments because the price of Bitcoin is tied to the amount of electricity used to mine it. As the price of the cryptocurrency rises, additional computing power is necessary to mine more.
It's hard to quantify precisely how much electricity the Bitcoin network consumes, but a conservative estimate would be just over one gigawatt, according to Motherboard. Meaning the mining of Bitcoin across the globe could power almost one million American homes every day.
Unfortunately, there are environmental consequences from the energy required to source Bitcoin because carbon emissions are a byproduct of the mining process. De Vries, in order to determine how much pollution mining is responsible for, used data taken from a coal-powered Bitcoin machine in Mongolia.
He found that one mine produces anywhere from 8,000 to 13,000 kg CO2 emissions per transaction and 24,000-40,000 kg of CO2 per hour. According to the EPA, the average passenger vehicle emits about 411 grams of CO2 per mile. That means carbon emissions from one hour of Bitcoin mining would be equivalent to a car traveling a distance of 100,000 miles.
Is it plausible to think Bitcoin can phase out digital payments if it emits five years worth of automobile pollution in one hour? In order to achieve a trustworthy and practical decentralized payment system, some serious improvements will need to be made to minimize its carbon footprint. When considering the effects of raging wildfires, climate change, and a record-breaking hurricane season, it's not the most auspicious of circumstances for Bitcoin. However, with a current market price of almost $7,000, Bitcoin is sure to draw more interest and support from individuals looking to cash in.
How do you feel about the CO2 caused from Bitcoin transactions? Do you think Bitcoin has the potential to replace digital and mobile payments given the environmental effects?