As opposed to traditional financial systems, cryptocurrencies like Bitcoin have shot to popularity in the past decade. The transaction is easier, time-effective, cost-effective, and decentralized in nature, because of which no single authority controls such cryptocurrency. No wonder today’s investors are lured by the current and future prospects of Bitcoin.
On the face of it, Bitcoin seems like an eco-friendlier option as compared to traditional currencies. We tend to believe that since Bitcoin trading is a virtual process, and therefore does not have adverse impacts on the environment, at least none that are immediately perceivable.
How Does Bitcoin Transaction Impact The Environment?
It is true that bitcoin transactions don’t need plastic or paper. However, there is a non-virtual side of Bitcoin transactions that includes the energy consumed to mine and maintain Bitcoins. As per researchers, the computation requirements of Bitcoin trading could increase the global temperature by 2 degrees within the next 16-22 years.
Carbon Footprint:
Increasing amounts of computational power are demanded by the bitcoin algorithm. According to Digiconomist, it is shocking to note that a single bitcoin transaction can generate CO2 equivalent to 706765 Visa credit card swipes. The carbon footprint of bitcoin transactions is comparable to the annual estimated carbon footprint of New Zealand, at around 37 million tonnes of carbon dioxide.
Energy Consumption:
The annual consumption of energy for bitcoin transactions has risen from 9.6 terawatt-hours in 2017 to approximately 77.8 terawatt-hours, as per the reports of Digiconomist. According to Cambridge Centre for Alternative Finance, the amount is 108.4 terawatt-hours.
The mining software for bitcoins takes around ten minutes to process the complex program and ends up consuming a large amount of energy. This is mainly because the software and systems used by traders are high-quality and consume more power than general computers or software.
The electricity used for this mining process comes from the consumption of non-renewable fossil fuels which in turn cause global warming. In this way, bitcoin trading is a threat to the environment and global climate in particular, in spite of being a completely virtual process.
Most of the mining capacity of Bitcoins is situated in southwest China where the power is comparatively cheaper, less taxed, and supplied by hydroelectricity and coal plants than other places like Sweden or the European Union. Research shows that the carbon footprint left behind by Bitcoin trading is equivalent to one of China’s largest cities. As per Ray Dillinger, Bitcoin transactions cause a lot of wastage of energy resources. Learn more about bitcoins at https://crypto-code.live
Comparison to Traditional Financial System:
Bitcoin enthusiasts often draw comparisons with the supposedly worse consumers of energy, such as governments. However, it is important to note that, unlike governments, Bitcoin’s wealth is distributed only among the wealthiest few, including corporate giants. Moreover, since bitcoin transactions are decentralized in nature, they are not controlled by any bank or any authority of any country. As a result, they can easily escape costs such as fees and energy taxes. So, traders can heat up the earth all they want and escape without paying a penny.
The negative impacts of bitcoin mining are not unknown to corporate giants. However, recognizing the disastrous impact of mining on global warming, Tesla suspended the use of bitcoins in transactions in May 2021. The company recognized the climatic dangers imposed by bitcoin transactions.
Conclusion
It is well known that the process of bitcoin mining is an energy-intensive one that could cause setbacks on our path to attain sustainable modes of development all across the globe. As per the University of Cambridge, Bitcoin trading ranks amongst the top 30 energy consumers if it was considered to be a country.
Follow Techdee for more!