Most of the time, when we think of carbon emission, we get images of coal-fuelled power stations and towering chimneys. Or columns of cars, stuck in a gridlock or traffic jam. But this is a time for a reality check. You might not believe it, but global Bitcoin mining already accounts for emissions of a small European country. Who is keeping track of the data or why should we pay attention to carbon footprint?
The news about Bitcoin surpassing Switzerland’s CO2 emissions become public last year, soon after the UK’s BBC reported on readily available data. The public media outlet looked at the cryptocurrency’s footprint and the power it uses to “mine” Bitcoin around the world. The truth is that Bitcoin requires more than seven gigawatts of energy to function or run properly. This is because of its reliance on a network of powerful computers, connected at all times.
BBC reported on entire “warehouses” of Bitcoin computers, which use more energy than the world’s entire banking system. But what is really at stake and what should we know about the existing records?
Are CO2 emissions one of crypto’s dirtiest secrets?
We are living in a day and age when any environmental impact comes under close scrutiny. Consumers around the world are becoming more environmentally-conscious. What does that mean? We are increasingly opting for services or products that care for the planet. A recent example of this trend is carbon offsetting. Polluters, such as airlines or transport companies, are already willing to give their customers an option to pay a little extra for their carbon footprint.
These funds are then used to plant trees or in other projects, which aim to “cancel out” carbon emissions. The Finnish flag carrier, Finnair is leading the way in this respect. The airline is already fully transparent, in showing each flight’s carbon emissions. But now, they have gone a step further. It has recently announced to go carbon-neutral by the year 2045, in a move reported by the country’s public broadcaster. Can we expect a similar move from Bitcoin?
BBC’s reporting largely relies on Cambridge Bitcoin Electricity Consumption Index, published by the Cambridge Centre for Alternative Finance. The University of Cambridge has since launched a live tool, which allows anyone to track Bitcoin’s energy consumption in real-time. While the comparisons are very useful, in order to picture the full impact of Bitcoin mining, it is important to keep in mind that they are estimates.
Problems with understanding Bitcoin
This is not the first time that Bitcoin has come under fire. But many respectable members of the scientific community point to a different problem. Bitcoin is a decentralized, digital currency that is difficult to track, with servers in more than one country.
This is one of the reasons that different companies from various industries have dedicated themselves to bringing a perfect alternative to Bitcoin in order to avoid using it due to its inherent ability to not mix well with governments.
So far, it seems that the sports industry, namely the fantasy football sector was able to achieve this on a much more centralized level. A “central” coin was created in order to govern the whole sector while having direct back doors for any regulatory approval or maintenance should it need one. However, there is still the issue of Bitcoin and its popularity.
This is why a group of researchers at the Lawrence Berkeley National Laboratory pointed out to flaws in existing models, which account for Bitcoin’s energy consumptions. The US scientists argue that there are many, competing ways of calculating Bitcoin’s impact on the planet. One of the major problems comes down to arriving at a shared, conceptual understanding of Bitcoin’s operations. The fact that Bitcoin is a dynamic entity, which is subject to constant change is not making it any easier.
At the time of writing, Bitcoin is emitting more CO2 than Belgium. At the same time, the emissions are still below 0.5% of the worldwide total. Regardless of what you think of Bitcoin’s footprint, the increase is inevitable. The cryptocurrency has gone from strength to strength, finding new users, especially in the developing world.