I heard that Bitcoin uses a lot of electricity… I've also seen opinions that it's bad for the environment.
There are critical opinions about Bitcoin, such as the claim that "Bitcoin is bad for the environment."
However, in recent years, mining using renewable energy has been spreading, and overseas, it is being noted as a potential means to solve environmental issues rather than causing environmental destruction.
This article explains the power and environmental issues pointed out for Bitcoin and the mining technology that has been spreading in recent years.
Key Points
- It is true that Bitcoin mining requires electricity, but its energy consumption is not particularly high compared to other industries.
- The shift to renewable energy is progressing, and CO2 emissions are decreasing year by year.
- Technologies are being developed that address various global issues, such as mining using surplus electricity and combining small-scale power generation with mining to supply electricity to small villages.
This article was written in Japanese and converted to English using a translation tool.
Date of writing (Japanese version): March 2024
The Electricity Cost Issue with Bitcoin
Bitcoin, a decentralized network with no central operator, adopts "PoW (Proof of Work)" as a mechanism to prevent tampering.
PoW requires a vast amount of computational processing, and a lot of electricity is used by mining machines.
Bitcoin incorporates a system with a very high attack cost to maintain decentralization and make it difficult to launch malicious attacks.
High-performance machines are needed, and electricity is also required for the cooling systems to cool the equipment.
Is the Claim that "Bitcoin is Bad for the Environment" True?
Bitcoin requires a lot of electricity, right? So, isn't it bad for the environment?
It's true that it consumes electricity, but it doesn't emit significantly more CO2 compared to other industries. It's also important to note that the use of renewable energy has been increasing recently.
Comparing Bitcoin Mining to Other Industries
According to a 2023 report by BMC, the energy used by Bitcoin mining globally is 275TWh, while gold mining consumes 571TWh. This shows that Bitcoin's energy consumption is about half that of gold.
Wow, it doesn't seem like Bitcoin's energy consumption is particularly high.
Bitcoin mining uses 275TWh, compared to 26,481TWh for residential buildings, 6,283TWh for air conditioning in the U.S., and 4,939TWh for finance and insurance.
Critics often highlight Bitcoin's energy use and claim it's environmentally destructive, but it seems a bit unfair not to mention the consumption in other industries.
I remember hearing a few years ago that Bitcoin transactions were compared to VISA transactions in terms of electricity consumption, and Bitcoin was criticized…
Comparing Bitcoin transactions to VISA transactions might not be appropriate. VISA's system requires a massive amount of energy to maintain the global financial system, so picking just the transactions for comparison feels off.
Calculating the total energy consumption involved in VISA's financial system seems difficult, but since Bitcoin's energy use is straightforward, it might be more prone to criticism.
Bitcoin Mining's CO2 Emissions are Decreasing
Bitcoin's emissions intensity (CO2 emissions per activity) has halved over the past three years. The reduction in CO2 emissions is partly due to China's 2021 regulation on mining, which was heavily reliant on fossil fuels.
Additionally, the introduction of more energy-efficient mining equipment and the shift to renewable energy are progressing.
Latest Mining Machines Are More Efficient
Newer machines can perform more calculations with less electricity, so the spread of efficient mining machines can help reduce electricity consumption and CO2 emissions.
The Idea that "Bitcoin is Environmentally Destructive" is Outdated
In recent years, it is said that half of the energy consumed by Bitcoin mining comes from renewable sources. In addition to environmental considerations, the pursuit of cheap electricity for profitability by mining operators has led to increased use of surplus renewable energy that otherwise has no buyers.
Coal and other fossil fuels not only have mining and transportation costs but also incur carbon taxes for greenhouse gas emissions.
On the other hand, the cost of renewable energy is decreasing due to technological advancements, and further innovations are expected to expand its use in many regions.
It seems like some people still claim "Bitcoin is bad for the environment" based on outdated information. If someone insists on this, it might be because they haven't kept up with recent news or they have another reason for wanting to tarnish Bitcoin's image.
Google Search Trends for "SDGs"
Compared to its peak in 2021, search demand for "SDGs" has decreased by about half as of March 2024. In Japan, the search interest is the highest at 100, while the second highest, Indonesia, is at 23.
Incidentally, in 2021, when Elon Musk pointed out Bitcoin's electricity issue, environmental topics like SDGs were trending globally.
Globally, interest in SDGs seems to have settled down a bit recently. In Japan, we still hear a lot about SDGs, so there might continue to be opinions that "Bitcoin is bad for the environment."
Recently, Bitcoin mining is not seen as environmentally destructive but as a possible solution to environmental problems, and its use cases are increasing. I hope the idea that "Bitcoin is bad for the environment" being outdated spreads in Japan, even if it takes a few years.
Bitcoin Mining as a Solution to Power Issues
🤩#Bitcoin mining improving the economics of a hydro power plant in 🇰🇪 Kenya pic.twitter.com/KgYKhzHq8u
— Luxor Technology 🟧⛏️ (@LuxorTechnology) January 21, 2024
The combination of Bitcoin and small-scale power generation has enabled people who previously lived without electricity to access it.
In small villages in Africa, building small hydropower plants was not economically viable due to low population and unused surplus power. However, by selling surplus electricity to miners, initial investment costs can be recouped, and stable power supply can be maintained.
- Surplus power generated in small villages has demand from miners seeking cheap electricity.
- For small villages considering small power generators, having a buyer from the start lowers the barrier to introduction.
- If electricity becomes widespread in the village, people gather, and economic activities become more active.
- If electricity prices rise due to village development, miners move to other villages seeking cheap power, potentially contributing to the development of each region.
Surplus power from renewable energy is often wasted, but mining can convert this surplus into computing power, creating economic value without wasting electricity.
Examples of Bitcoin Mining Solving Environmental Problems
- Methane Gas Utilization: Recovering methane gas from landfills to generate electricity for mining (methane is about 25 times more potent as a greenhouse gas than CO2).
- Flare Gas Utilization: Using gas flared during oil refining for mining (flare gas is toxic and has significant greenhouse gas effects if released directly).
- Utilizing Surplus Renewable Energy: Using unstable renewable energy for mining can promote the development and expansion of renewable energy.
It's surprising that advancements in mining technology might solve environmental problems! But won't the electricity used for mining compete with the power needed for people's daily lives?
Since surplus power is being used, it doesn't compete with consumer demand. In regions and times where electricity demand is high, electricity prices rise, increasing mining costs.
Why Does Bitcoin Consume More Power Than Altcoins?
The reason altcoins consume less power than Bitcoin is due to fundamental differences in their mechanisms. While Bitcoin uses PoW, many altcoins adopt PoS.
Both PoW and PoS have their own advantages and disadvantages, and it is not appropriate to judge their superiority solely based on power consumption.
I often see media and social media posts explaining the disadvantages of PoW…
But I don't think the drawbacks of PoS are explained as much.
Many media outlets introduce PoS as "a new technology that is environmentally friendly!" or "PoS solves the problems of PoW!" But I think more accurate information about PoW and PoS should be more widely known.
For those interested, please read the following article on proof of work.
Summary: The Idea That "Bitcoin is a Waste of Electricity" is Outdated!
Key Points
- While it is true that Bitcoin mining requires electricity, it does not consume significantly more energy compared to other industries.
- There is a shift towards renewable energy, and CO2 emissions are decreasing year by year.
- Technological developments are advancing to solve various global issues, such as using surplus electricity for mining and combining small-scale power generation with mining to supply power to small villages.
Bitcoin mining is advancing with various initiatives utilizing renewable energy!
I've also seen opinions that "Bitcoin is bad for the environment," but I think that is based on outdated perceptions. In the future, the idea that "not mining is a waste of electricity" might become more widespread.
Mining using renewable energy is gaining attention in various countries, and even TEPCO Power Grid in Japan has entered the scene.
There are increasing use cases overseas, and it would be great if the image of mining in Japan gradually changes.
Bitcoin seems a bit complicated and I don't quite understand it, but I want to learn more about it.
Let's learn more about Bitcoin!
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Writer：Sigeru Minami
Creator of "Bitcoin-zukan.com."
Active as a handmade craftsman of Bitcoin goods.