Bitcoin was launched in 2009. But it wasn’t until recently that the term mining started to change its meaning for the wide public. Bitcoin mining. Cryptocurrencies. More and more people were engaged in this new type of mining the currency of the internet. And the rest of the world was curious what it is and how it creates and retains monetary value, how it is protected against fraud, if it is here to stay. Bitcoins are completely virtual coins. They are designed to be ‘self-contained’ for their value – there is no precious metal behind. There is no need for banks to move and store the money. Many people look at cryptocurrencies as hope that a currency can exist that preserves value, is easy to exchange and transfer, is more transportable than hard metals. And most of all – is outside the influence of central banks and governments. But the coin has two sides and a question started to emerge…do bitcoins interfere with a vision for a sustainable future?
Can the planet afford Bitcoins?
The simplest definition of a cryptocurrency I’ve come across is given in LifeWise and states that they are “lines of computer code that hold monetary value. Those lines of code are created by electricity and high-performance computers.” Though it is never as simple as that, my deeply humanitarian, non-tech-savvy mind finds it easy to comprehend, so let’s stick to that basic outline of the term. It says what’s important for our discussion – cryptocurrencies, particularly Bitcoin, use electricity.
And they use a lot of electricity. Bitcoins are forgery-resistant and one of the reasons for that is they are computationally-intensive to create. They require large amounts of energy and powerful hardware. According to a Business Insider article, the use of complicated and energy-intensive algorithms for the creation of Bitcoins has been deliberately designed as a way to give them some degree of exclusivity. A single Bitcoin transaction uses 200-kilowatt hours – nearly enough to power a whole house over four weeks, says ING economist Teunis Brosens. In the current state of affairs, most of the world still relies on coal, gas, and oil to produce electricity. The use of energy-consuming algorithms to create Bitcoins means we are burning fossil fuels for each transaction. Which means exhausting natural resources and creating health-threatening pollution with harmful small particulates, or soot, as well as byproducts linked to global changes in climate.
At present, there are more than two billion dollars worth of bitcoins in existence. The system is self-limiting. Bitcoins will stop being created when the total number reaches 21 billion coins, which is expected to happen around the year 2040. As of 2017, more than half of those bitcoins had been created. Bitcoin mining’s energy use is growing at a rate of 25% per month. If it keeps that rate of growth, it will consume as much electricity as the US in 2019. And by 2020, bitcoin mining could be using the same amount of electricity every year as is currently consumed by the entire world.
Will Bitcoins repeat the history of many innovations and inventions that started spreading their negative impact on the environment before we even started to think about the environmental costs of their adoption? We hope not.
The articles below give some good insights into the topic.
If you’re like me, you’ve probably been ignoring the bitcoin phenomenon for years – because it seemed too complex, far-fetched, or maybe even too libertarian. But if you have any interest in a future where the world moves beyond fossil fuels, you and I should both start paying attention now.
Bitcoin mining requires vast amounts of energy for each transaction – can the world afford it?
Bitcoin – the initial virtual banking currency of the internet – has existed for several years now and many people have questions about them. Where do they come from? Are they legal? Where can you get them? Why did they split into Bitcoin and Bitcoin Cash? Here are the basics you need to know.