How sustainable is Bitcoin mining?

    Simar Marwaha
    Simar Marwaha
    Published on December 24, 2022 6:29 PM

    Updated on January 16, 2023 11:06 AM

    To carry out the labour involved in crypto mining, Bitcoin and other proof-of-work cryptocurrencies need a lot of energy—more than is utilised by entire economies. Read more about it here.
    How sustainable is Bitcoin mining?
    Source: Pexels

    Many people are positive on  cryptocurrencies like Bitcoin, but critics point out a significant drawback: cryptocurrency mining consumes a lot of energy. While there are other ways to verify cryptocurrency transactions and create new coins, the two most popular cryptocurrencies, Bitcoin and Ethereum, employ mining as their primary mechanism.

    According to a recent analysis by the Blockchain Mining Council (BMC), Bitcoin mining has swiftly shifted away from non-renewable resources in recent years. The usage of a greener, more sustainable energy source by the cryptocurrency mining sector to safeguard the largest cryptocurrency blockchain and mine bitcoins increased by 59% on an annual basis.

    How sustainable is Bitcoin, and what effect does cryptocurrency have on the environment, are topics covered in the article we have today. Continue reading if you are interested.

    Also read: Bitcoin Taproot Upgrade: All you need to know

    Power Usage of Bitcoin

    The hashrate of the network and the energy consumed by commercially available mining rigs may be used to determine the amount of energy needed for Bitcoin and cryptocurrency mining. Assuming that prices and user acceptance continue to fluctuate, the amount of energy used by bitcoin mining will probably change over time.

    The motivation to start mining also rises as the value of the block reward does, making cryptocurrency mining a competitive activity. More energy is used by bitcoin networks as a result of higher cryptocurrency values.

    The energy requirements of cryptocurrency mining are a benefit, not a flaw. The automated process of confirming Bitcoin transactions without the involvement of banks or other reputable third parties is known as "mining."

    The network depends on the processing power of thousands of mining machines, therefore the way the transaction validation procedure is built requires a lot of energy. Proof-of-work consensus-based cryptocurrency blockchains are kept secure by this reliance.

    It is more difficult to determine the carbon impact of cryptocurrencies. Although the majority of the nations where cryptocurrencies are mined use fossil fuels as their main energy source, miners must look for the least costly energy sources to stay viable.

    According to Digiconomist, Turkmenistan produces the same amount of carbon dioxide per year as the Bitcoin network, or around 73 million tonnes.

    The majority of Bitcoin mining, according to researchers at the University of Cambridge, takes place in Kazakhstan, China, and the United States. The Center for Strategic and International Studies estimates that coal and crude oil account for around 76% of China's energy consumption. China accounts for 21% of the worldwide hash rate. In the US, mining accounts for 38% of all mining.

    According to EIA data from 2019, the majority of the U.S.'s power is produced by burning fossil fuels. 13% of the world's Bitcoins are mined in Kazakhstan, which mostly use fossil fuels. As a result, almost 72% of the world's Bitcoin mining is done by three nations that rely largely on fossil fuels.

    Due to the rapid obsolescence of mining equipment, cryptocurrency mining also produces a substantial amount of electronic trash. This is particularly valid for Application-Specific Integrated Circuit (ASIC) miners, which are specialised devices made for mining the most widely used cryptocurrencies. The Bitcoin network, according to Digiconomist, produces over 38 thousand tonnes of electronic garbage per year.

    Could Bitcoin mining use less energy?

    Large-scale bitcoin miners are frequently found in areas with inexpensive, dependable, and abundant electricity. However, it is not necessary for the production of new coins and processing bitcoin transactions to be energy-intensive.

    A less resource-intensive alternative to cryptocurrency mining is the proof-of-stake (PoS) technique of approving transactions and creating new currencies. Instead, permission to operate the crypto network and verify transactions is provided depending on the amount of bitcoin that the validator has "staked," or committed not to trade or sell.

    Incremental innovation techniques are also being developed, including evidence of history, proof of time passing, proof of burn, and proof of capacity. There is no such goal in the Bitcoin community, but Ethereum's creators decommissioned the blockchain's proof-of-work mechanism with estimations calling for a 99.9% reduction in carbon emissions. Since Bitcoin is the most widely used cryptocurrency, mining and its high energy costs are probably here to stay.

    Some cryptocurrencies require a lot of energy, specialised equipment, and garbage to operate. However, it's crucial to keep in mind the environmental costs of harvesting natural resources and using energy and power to create and sustain fiat currency and our existing banking system. In that regard, some are not ecologically friendly.

    In other words, it seems doubtful that Bitcoin would minimise its energy footprint given how energy-intensive, competitive, and reward-based the validation process is. The network will still need a lot of power to validate transactions after the last bitcoin is awarded.

    Bitcoin Report: Blockchain Mining Council

    According to a recent Blockchain Mining Council (BMC) study, Bitcoin mining has shifted away from non-renewable resources in recent years. A more environmentally friendly and renewable energy source has been embraced by the cryptocurrency mining industry, and its usage to protect the largest cryptocurrency blockchain and mine bitcoins has increased by 59 percent annually. 44 Bitcoin mining businesses make up the BMC. It asserts to represent half of the mining operations currently active on the Bitcoin network.

    BMC recently published the results of its study, in which enterprises were questioned about their hash rates of operations, how much energy they used, and what proportion of their energy came from renewable sources including hydro, solar, wind, nuclear, and geothermal energy.

    The survey's findings showed that, in Q1 2022, the worldwide Bitcoin mining industry's green energy mix was 58.4 percent, a little decrease of 0.1 percent from the previous quarter. Comparing the growth to the predicted 36.8 percent in the first quarter of 2021, the growth is deemed noteworthy.

    The analysis also demonstrates an improvement in these mining operations' energy efficiency. The hash rate has grown by 23% in the past year, from 164.9 to 202.1, while power usage has decreased by 25%. Efficiency has increased by 63 percent from the previous year and by 5,814 percent from eight years ago, according to this data.

    It should be noted that BMC was established in June 2021, and it is unclear how it arrived at the 36.8% projection for the first quarter of 2021. The BMC members provided the information for the latest report on themselves. The participants claimed to be utilising a combination of 64.6 percent renewable energy. The data gathered from BMC members was used to calculate the worldwide figures.

    The BMC report conflicts with another report that was released in February by the scholarly journal Joules. According to the survey, operations carried out to maintain the Bitcoin network increased their carbon emissions by 17 percent as a result of crypto mining.

    According to journal research that broke down energy use by industry, Bitcoin mining activities used 247 terawatt-hours (TWh) of energy worldwide. This amount represents 0.16 percent of the world's total energy consumption and less than half of the energy used in gold mining activities.

    Because it uses a lot of energy and has a large carbon footprint, bitcoin has drawn a lot of criticism. The mining sector has been anxious to show off its advancement toward cleaner and more sustainable energy sources in order to overcome this criticism.

    Are Bitcoin Mining Operations Sustainable?

    Cost is by far bitcoin mining's biggest disadvantage. There is no getting around the fact that starting a mining enterprise is costly. Early Bitcoin miners could utilise regular computers, but as more users joined the network, mining became increasingly complex. Bitcoin mining has changed from what it once was. It is dangerous, uses a lot of energy, and calls for strong, specialised equipment.

    Despite this, a large number of individuals continue to be attracted to the mining industry as an investment opportunity. Profiting from bitcoin mining is entirely feasible. Your level of investment will determine whether or not it is lucrative for you. The blockchain will continue to be built by miners for many years to come. So, if you believe mining bitcoins is for you, get started now.

    Bitcoin Mining FAQs

    Is Bitcoin mining illegal?

    Most of the time, mining bitcoin is legal. A few nations, including Algeria, Bangladesh, China, Egypt, Iraq, Morocco, Nepal, Qatar, Russia, and Tunisia, have banned bitcoin mining. Due to energy issues, Sweden is advocating for a ban inside the EU.

    Can you mine 1 bitcoin?

    In a technical sense, mining 1 Bitcoin is impossible, especially if you work alone. However, if you mine in a pool, your payouts will often be in satoshis, which are little amounts of the bitcoin coin that, after a certain amount of mining, might equal one bitcoin.

    Who pays Bitcoin miners?

    The Bitcoin network uses a reward scheme that compensates miners with bitcoins to encourage mining. Currently, 6.25 Bitcoins are given to miners for each correctly solved puzzle.

    Do I have to pay taxes on Bitcoin?

    You must pay taxes on the difference between your buy price and the sale price if you sell cryptocurrencies for a profit. It should be noted that this includes trading one cryptocurrency for another and using it to pay for products or services, as well as selling cryptocurrency for cash.

    Can Bitcoin be traced by FBI?

    Transparency, which allows anybody, including the government, to see all bitcoin transactions made using that blockchain, is a basic feature of blockchain technology. The transparency of blockchain technology allows for the public access to Bitcoin transactions.

    Is Bitcoin mining hard to learn?

    Mining is a highly competitive industry, yet it is still very simple to get started. In the early days of Bitcoin, enthusiasts could just load up some software and begin immediately. Even though those times are long gone, it's not as difficult as it may appear to set up a dedicated Bitcoin miner.