tech2 News StaffMar 19, 2019 11:28:19 IST
Mining and transacting Bitcoin has been a subject of controversy for many years now. The environmental impact of the cryptocurrency, though, is the hot and new point of contention.
While devotees of Bitcoin argue that its footprint is mitigated by using renewable energy sources to power them, like hydroelectric power, a new report in Joule suggests that it isn't — far from it.
Authored by blockchain specialist Alex de Vries, the report argues that the impact of Bitcoin mining and transacting on the environment will be terrible. Its cost calculations are more complicated, and its mining cost higher than that of any other financial system in the world.
Based on estimates, the energy cost of the currency is larger than that of some small nations, the report says.
"... the Bitcoin network, with an electrical energy footprint of 491.4 to 765.4 kilowatt-hours per transaction on average, is relatively much more energy-hungry than the traditional financial system. The resulting electronic waste generation could equal that of a small country like Luxembourg, with a staggering average footprint of four light bulbs worth of electronic waste per processed Bitcoin transaction," the report reads.
1,800 Bitcoins are mined every day and feed into the ~3,00,000 Bitcoin transactions carried out on average every 24 hours. Much of this processing (almost 50 percent of it) takes place in the Sichuan province in China.
While the footprint is undoubtedly massive, the 'green energy' solution being proposed as a solution may not be the Hail Mary that the blockchain industry and cryptocurrency miners are hoping for.
Energy production in Sichuan drops drastically during summers, and additional power is directed to keep the network functional. This causes a spike in carbon usage — far, far higher than the average Visa or PayTM transaction.
According to de Vries' calculations, one bitcoin transaction generates between 233 to 363 kilograms of carbon dioxide, unlike the few grams generated by a Visa transaction.
This, according to the report, is more reason to turn to polluting but reliable sources of power to keep the system afloat.
"In the worst-case scenario, it presents an incentive for the construction of new coal-fired power stations to fulfil this purpose," de Vries notes.
"Given the fundamental challenges in uniting Bitcoin mining with renewable energy, along with the fact that energy use is not the only way in which Bitcoin impacts the environment, we should conclude that renewable energy is not the answer to Bitcoin’s sustainability problem."
The report makes it clear that renewable energy isn't a solution for the Bitcoin conundrum. The efficiency of renewable tech today simply can't keep up with the pace of transacting and mining.
Whether Bitcoin remains a dominant currency or not, and whether the mining and transacting processes get less energy intensive or not, cryptocurrency's future hinges on finding a creative energy solution for meeting its specific needs.
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