Electricity, water, CO2: why Bitcoin is responsible for 95% of the environmental impact of cryptocurrencies
Green bias.
Virtual currencies are booming and already weigh more than 3,100 billion euros worldwide. But scientists are sounding the alarm: the environmental footprint of Bitcoin, the first of these currencies, is constantly growing.
On January 18th, on the eve of his inauguration at the White House, Donald Trump announced the launch of his own cryptocurrency, called Trump Meme. Once opposed to these virtual currencies, it has made a radical shift in recent months, to the point of becoming one of its greatest defenders.
Cryptocurrencies are on the rise, and not only in the United States. On the old continent, almost one in ten Europeans holds digital money—a figure that has more than doubled between 2022 and 2024, specifies the European Central Bank in a study published last December.
The global capitalisation of all cryptocurrencies amounts to more than 3,100 billion euros, which is more than the gross domestic product of France. And if there are several thousand different cryptocurrencies, the famous Bitcoin, born in 2008, remains by far the most popular.
Getting rid of banks
The success of these virtual currencies is based on the promise of greater independence from banks. "While conventional currencies, such as the euro or the dollar, rely on institutions and central banks to establish their credibility, cryptocurrencies such as Bitcoin are decentralised, explains Julien Prat, researcher at the Paris economics and statistics research centre and head of the Blockchain@X academic chair. No one can take control of them.
To ensure the credibility of the Bitcoin network despite the absence of centralised authority, "all transactions carried out are grouped in packets in computer blocks, then added to a chain. We are then talking about blockchain," emphasises Alex de Vries, researcher in the department of economics at the Free University of Amsterdam (Netherlands). This giant account book makes it possible to trace all the transactions since the creation of the very first Bitcoin digital token.
© Bank of France
And in order to guarantee the inviolability of this blockchain, the Bitcoin community relies on a method called "proof of work," which acts as a consensus mechanism between the participants. The principle is ingenious, but it requires a gigantic computing power—very powerful computers.
All the computers whose owners want to get new bitcoins are in constant competition to solve a mathematical challenge as quickly as possible. Once the riddle is solved, a new block is added to the chain, and the winner wins the tokens that have just been made—or rather "mined," in the jargon. "The stronger your computing power, the better your chances will be. At each event, 3,125 bitcoins are awarded to the winner, and this every ten minutes. This represents a sum corresponding to almost 300,000 dollars [275,000 euros, editor's note]", emphasises Julien Prat. In this context, the global competition is raging to succeed in "mining" new digital tokens.
Higher power consumption than in the Netherlands
According to data collected and updated daily by the University of Cambridge (England), the cryptocurrency star consumes nearly 180 terawatt hours (TWh) of electricity each year to ensure the operation of its network, which is more than entire countries such as the Netherlands, Argentina, Poland, Norway, or Sweden. Thus, Bitcoin alone represents 0.7% of total electricity consumption worldwide.
Its carbon footprint is equally impressive: the operation of this decentralised network emits nearly 95 million tonnes of CO2 equivalent each year. Either as much as countries such as Paraguay, Morocco, or Israel. "These CO2 emissions are mainly linked to the use of fossil fuels such as coal or gas, which are used to produce the electricity consumed by the large computing units that mine bitcoin," says Alex De Vries.
According to the latest data provided in 2022 by the University of Cambridge, the main clusters of mining units are located in the United States, China, and Kazakhstan. Countries whose electricity production is dominated by fossil fuels. "The Chinese government has, however, banned the mining of cryptocurrencies on its soil in 2021. But some of the bitcoin continues to be manufactured there on a smaller scale, in order to stay under the radar," observes Alex de Vries.
We should not expect that Bitcoin will become less energy-intensive, according to experts. © Art Rachen/Unsplash
That's not all. The Bitcoin network is also proving to be extremely water-intensive, assures the Dutch researcher: "The generators of the power plants that work thanks to fossil fuels must be refreshed, which requires using large quantities of water. And the facilities for mining cryptocurrencies are also equipped with cooling systems in order to avoid overheating." Result: According to the calculations carried out by Alex de Vries, the Bitcoin network swallowed 1,574 billion litres of water during the year 2021. 16,000 litres of blue gold would thus be consumed during each transaction, equivalent to the contents of one hundred bathtubs.
Eco-friendly cryptos?
Are all cryptocurrencies as resource-intensive? Absolutely not, assure the researchers we interviewed. "In reality, Bitcoin is the one that consumes the most energy by far," emphasises Alex de Vries. He estimates that the cryptocurrency star is responsible for 95% of the environmental impact generated by the sector because it is one of the only ones that still relies on the "proof of work" system.
Most other cryptocurrencies now use a so-called "proof of stake" system, which requires much less computing power—and therefore energy. This is the case of Ethereum, the second most popular virtual currency in the world.
"It works a bit like a lottery. Each person who owns Ethereum tokens can register on a list, and then an individual is drawn at random. He then wins the new tokens created. The more Ethereum we own, the more chances we have to win," explains Julien Prat.
This random draw is much less energy intensive than the multiple calculations used for the "proof of work." "In 2022, Ethereum's transition from the proof-of-work system to the proof-of-stake system has reduced its energy needs by 99.8%," describes Alex de Vries.
Alas, we should not expect Bitcoin to follow the same path, the two experts emphasise. "It will not be reformed, in particular because there are too many financial stakes. This cryptocurrency currently weighs more than $1,000 billion. However, to change the paradigm, the entire Bitcoin community would have to agree. The financial risk associated with such a radical change is far too great," emphasises Julien Prat.
"The proof of work system is deeply rooted in the basic philosophy of the community. To abandon it would be for them to distort Bitcoin, which is sometimes perceived as a kind of religion with immutable rules," completes Alex de Vries.
If the operation of this network remains fixed, how can we hope to reduce our carbon footprint? For the defenders of Bitcoin, the solution would be on the side of renewable energies. By absorbing the surplus of electricity production from wind, solar, or hydraulic power, this cryptocurrency could even facilitate the energy transition, according to them. For example, when the wind blows continuously for several hours, wind turbines can produce more electricity than the grid needs. And, since electricity is difficult to store, part of this production can be lost if it is not immediately used. The crypto miners would then come to absorb this surplus, explain the supporters of Bitcoin·
An argument disputed by some specialists. "Renewable energies do not produce a surplus all the time. However, it is necessary to run the mining units without interruption in order to remain competitive. The miners installed in the United States also consume mainly fossil fuels throughout the year," emphasises Alex de Vries.
According to the latest data collected by the University of Cambridge, renewables provided in 2022 only a quarter of the electricity consumption of Bitcoin, and nuclear 11%. Coal and gas therefore continued to provide most of the mining. If the queen of cryptos really wants to become more "green," she still has a way to go.
So, could the cryptocurrency sector still play a role in the energy transition? Some virtual currencies, such as SolarCoin or BitGreen, have been launched with the aim of financing the production of renewable energies. "It seems risky to base these investments in infrastructures that are supposed to last over time on such volatile crypto assets, nuanced Alex de Vries. A three-year horizon corresponds to an eternity in the world of cryptos!
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