New Study Reveals Environmental Impacts of Bitcoin

While the cryptocurrency sector provides valuable opportunities and benefits, according to new research by United Nations scientists, it also has major, overlooked environmental impacts.

Bitcoin, the most popular cryptocurrency, has disturbing impacts on climate, water, and land with global Bitcoin mining highly dependent on fossil fuels.

The extraordinary rise in cryptocurrency prices over the previous decade has prompted huge investments in the cryptocurrency sector. Undeniably, digital currencies have won the faith of the world’s top investors, ranging from large corporations and tech millionaires to criminals, money launderers, and sanction beakers.

Thanks to blockchain and other technological breakthroughs, digital currencies now constitute an advanced element of the world’s financial system. They are said to even have the potential to influence the world’s strongest currencies.

Bitcoin is the most renowned and popular cryptocurrency. This motivated the UN scientists to evaluate the environmental impacts of Bitcoin across the world by looking at the activities of 76 Bitcoin mining nations during the 2020–2021 period. The results showed that in addition to a substantial carbon footprint, global Bitcoin mining activities have significant water and land footprints.

“Technological innovations are often associated with unintended consequences and Bitcoin is no exception,” said Professor Kaveh Madani, the Director of the United Nations University Institute for Water, Environment and Health (UNU-INWEH), who led the study.

“Our findings should not discourage the use of digital currencies. Instead, they should encourage us to invest in regulatory interventions and technological advancements that improve the efficiency of the global financial system without harming the environment.”

Conspicuous Consumption

According to study results, published by the United Nations University and Earth’s Future journal, during the 2020–2021 period, the global Bitcoin mining network consumed 173.42 Terawatt hours of electricity.

This means that if Bitcoin were a country, its energy consumption would have ranked 27th in the world, ahead of a country like Pakistan, with a population of over 230 million people.

The resulting carbon footprint was equivalent to that of burning 84 billion pounds of coal or operating 190 natural gas-fired power plants. To offset this footprint, 3.9 billion trees should be planted, covering an area almost equal to the area of the Netherlands, Switzerland, or Denmark, or 7% of the Amazon rainforest.

During this time period, Bitcoin’s water footprint was similar to the amount of water required to fill over 660,000 Olympic-sized swimming pools, enough to meet the current domestic water needs of more than 300 million people in rural sub-Saharan Africa.

The land footprint of worldwide Bitcoin mining activities during this period was 1.4 times the area of Los Angeles.

The UN scientists report that Bitcoin mining heavily relies on fossil energy sources, with coal accounting for 45% of Bitcoin’s energy supply mix, followed by natural gas (21%).

Hydropower, a renewable energy source with significant water and environmental impacts, is the most important renewable source of energy of the Bitcoin mining network, satisfying 16% of its electricity demand. Nuclear energy has a considerable share of 9% in Bitcoin’s energy supply mix, whereas renewables such as solar and wind only provide 2% and 5% of the total electricity used by Bitcoin.

China, by a large margin, has been the biggest Bitcoin mining nation. To offset the carbon emissions from China’s coal-intensive Bitcoin mining operations in 2021–2022, about 2 billion trees should be planted, covering an area equivalent to the sum of Portugal and Ireland or 45,000 times the area of Central Park in New York City.

Aside from China, the world’s top 10 Bitcoin mining nations in 2020–2021 included the United States, Kazakhstan, Russia, Malaysia, Canada, Germany, Iran, Ireland, and Singapore.