Why Does Bitcoin Use So Much Energy?
To verify transactions, Bitcoin requires computers to solve more and more complex mathematical puzzles and equations. That is the basic concept that the cryptocurrency world refers to as a “proof-of-work” system and is drastically more energy-intensive than verifying transactions on centralized networks.
According to the Cambridge Centre for Alternative Finance(CCAF), Bitcoin consumes around 110 Terawatt Hours per year. This consumption is equivalent to 0.55 percent of global electricity production. For sure, this is a lot of energy getting consumed.
The cryptocurrency world is primarily dependent on fossil fuels. Bitcoin mining often uses electricity produced from fossil fuels. As the price of Bitcoin increases, the amount of energy consumed in the process also increases. This method is the main reason Bitcoin consumes a lot of energy.
However, Bitcoin uses less energy than banks. A recent report from Galaxy Digital found that the Bitcoin network consumes less than half the power consumed by the banking industry. In addition to this, Bitcoin consumes 113.89 terawatt-hours (TWh) per year, while the banking industry, on the other hand, consumes 263.72 TWh per year.
How Does Bitcoin Harm the Environment?
Bitcoin generates significant quantities of electronic waste or E-waste because Bitcoin mining gets done with specialized hardware, a single purpose that becomes obsolete roughly within a short period.
Carbon dioxide produced by Bitcoin mining could increase global temperature by two degrees Celsius over thirty years. That is according to the Sierra Club. That would eventually have a devastating effect on the environment, destroying the forests and collapse the ecosystem and oceans.
Is Bitcoin Eco-friendly?
Digital assets such as Bitcoin have a considerable environmental effect due to the energy required to power the processing and mining activity behind them.
Theoretically, it is possible that miners can mine Bitcoin using renewable energy, but in reality, it is usually impractical. While transitioning Bitcoin mining, using renewable energy may not reduce the overall energy consumption. For instance, It could reduce the use of fossil fuels. Bitcoin miners in China use both fossil fuel and hydroelectric energy.
Bottomline
Bitcoins’ main sustainability issue is the vast amount of energy it uses in mining. Millions of Bitcoin mining machines are now consuming as much electric energy. For that reason, the higher the price of Bitcoin goes, the more power it takes for miners to get Bitcoin.
There must be an accurate perception of how much power gets utilized and what proportion is renewable for improvement. Elon Musk said he had spoken with a group of miners who committed to publishing data on their renewable energy usage, a development he called “potentially promising.”