Bitcoin is turning the heads of investors, but also of electricity meters! As miners dig for digital gold, the planet hopes they find some renewable energy too! In the end, Bitcoin may be the future of finance, but let’s hope it doesn’t leave our planet without a green future!
What are Bitcoins?
Born in 2009 as the first cryptocurrency, perhaps even the best known, Bitcoin revolutionised the way we think about money and financial transactions.
This is an innovative digital payment system that enables direct transactions between people without intermediaries, making online transactions fast, cheap and secure.
With its blockchain-based technology, it offers an alternative system to traditional institutions. The blockchain is like a large shared digital book that records transactions in blocks linked together in a chain.
Transactions are visible to all network participants, ensuring a high level of transparency.
However, there are also risks associated with this currency, such as price volatility, loss of the ‘wallet’ if passwords are lost, regulatory uncertainty and illegal activities.
Environmental impact of mining
Mining is the process by which new coins are generated and transactions are verified on the blockchain. The process requires powerful computers that solve complex mathematical problems.
These computers, known as nodes, must be operational at all times and require a great deal of energy to run and to cool the computers.
The energy consumption of mining is therefore enormous.
In May 2023, the annual global electricity consumption for Bitcoin mining was approximately 95.58 terawatt hours.
This is comparable to the annual energy consumption of a country like Belgium.
This energy consumption raises significant sustainability concerns.
The environmental impact of Bitcoin mining is mainly due to the intensive use of electricity, often from non-renewable sources.
This contributes to greenhouse gas emissions and air pollution. In addition, the rapid obsolescence cycle of the hardware used for mining generates a significant amount of e-waste.
Initiatives for cryptocurrency sustainability
According to the Bitcoin ESG Forecast, Bitcoin mining using sustainable energy reached a new all-time high of 54.5 per cent in 2023.
Some mining farms are switching to renewable energy sources, such as solar and hydroelectric power, to reduce their environmental impact. In addition, there are efforts to improve the energy efficiency of hardware used in mining.
There are other cryptocurrencies, such as Ethereum, which uses technically different and evolving, admittedly less energy-intensive mining systems.
It is important to note that traditional monetary systems also have a significant environmental impact. The production of coins and banknotes, their transport, and the operation of banks and financial infrastructures require large amounts of energy.
According to the 2019 World Payment Report, copper and tin mining and their processing account for 29% of the environmental impact of physical currency. 31% is due to the transport of money to the various supply points, such as banks, while 24% is attributable to the operation of ATMs.
Therefore, a balanced and conscious approach is crucial to reduce the overall environmental impact of our financial transactions.
Play for the planet!