Since the creation of Bitcoin, until today, many of its aspects have been criticized. However, one of the strongest criticisms that has always been made of it is the amount of energy that is consumed thanks to its mining process. This has gotten to such a point that even Elon Musk cited this reason for stopping accepting BTC payments at Tesla. But is there an alternative to decrease Bitcoin’s carbon footprint?
Some Tesla investors, along with environmentalists, have been increasingly critical of the way Bitcoin is mined. This process is done using large amounts of electricity generated with fossil fuels.
In that regard, Musk recently said that he especially rejects the use of coal, which has the worst emissions of any fuel.
The controversy over BTC’s environmental footprint
Unlike conventional traditional currencies, Bitcoin is virtual and is not made of paper or plastic, not even metal. However, this is precisely why it consumes a lot of energy, since it is created with high-powered computers all over the world.
Bitcoin production is estimated to generate between 22 and 22.9 million metric tons of carbon dioxide emissions per year. The source for this metric is a 2019 study published in the scientific journal Joule.
At the current rate, such bitcoin mining consumes roughly the same amount of energy annually as the Netherlands in 2019. This is shown by data from the University of Cambridge and the International Energy Agency.
Some proponents of cryptocurrency point out that the existing financial system with its millions of employees and computers in air-conditioned offices also consumes large amounts of energy. Which is a valid point, but the criticism is that Bitcoin is supposed to be a better alternative.
Factors That Could Increase Bitcoin’s Carbon Footprint
Bitcoin, currently known as the largest cryptocurrency in the world, has become increasingly common. Since its inception it has become increasingly accepted by more companies and major financial firms around the world.
Higher demand and higher prices make more miners compete to mine the tokens. This process involves having machines that solve puzzles in the shortest time possible to earn coins. In addition, after the 2020 halving, it is necessary to use increasingly powerful computers that demand more energy.
What is being done about it?
There are increasing attempts in the cryptocurrency industry to mitigate the environmental damage of Bitcoin mining. Especially now, with the entry of large corporations into the cryptocurrency market, ways are being sought to boost the use of renewable energy in this process.
Some sustainability experts say that companies could buy carbon credits to offset the impact. And blockchain analytics firms say that it is theoretically possible to trace the source of Bitcoin, increasing the possibility that a premium will be charged for green Bitcoin. The climate change policies of governments around the world could also help.
Projects from Canada to Siberia are looking for ways to move bitcoin mining away from fossil fuels, such as using hydroelectric power. At the very least, it is hoped that it can reduce its carbon footprint, and make Bitcoin more palatable to major investors.
On the other hand, some try to reuse the heat generated by mining to meet other needs. For example, heating. Similarly, others use the energy generated by flare gas, a by-product of oil extraction that is typically burned, for crypto mining.
One factor that could disrupt these advances regarding Bitcoin’s carbon footprint is China. What happens is that there is a dominance of the miners who come from China, and they do not have many motivations to change their energy sources. Specifically, Chinese miners account for about 70% of production, data from the Center for Alternative Finance at the University of Cambridge shows.
In terms of costs, fossil fuels are cheaper than renewable energy. This means that there are few quick fixes to the Bitcoin emissions problem, some industry players and academics warn.
Chinese miners tend to use renewable energy, mainly hydroelectric power, during the rainy summer months, but fossil fuels, mainly coal, during the rest of the year.