In the past few months, you’ve likely been hearing a lot about the cryptocurrency called “bitcoin’. Of course, this makes sense -- in 2010, one bitcoin would net you $0.08, and today, one bitcoin would earn you $35,253.70!
Now, what is it? Bitcoin is a digital currency invented in January 2009 by an anonymous person or persons who goes by the pseudonym of Satoshi Nakamoto. (The true identity of the creator remains unknown.) While an exact number of users cannot be determined because multiple accounts can be created, there are likely at least over 100 million Bitcoin owners in 2021.
Every person has their own private “Bitcoin wallet” and private keys used for secure transactions. This currency is stored on a public ledger (called blockchain), which is essentially “a record-keeping system that maintains participants’ identities in secure and (pseudo-)anonymous form, their respective cryptocurrency balance, and a record book of all the genuine transactions executed between network participants” (Investopedia). There is no central bank that maintains Bitcoin. Unlike fiat money, such as USD, Euros, or Indian rupees, no single person or organization manages this decentralized currency. So, no additional bank or PayPal fees need to be paid when making electronic payments. However, a cap of 21 million bitcoin can be mined, and over 18.5 million bitcoin has been claimed.
If you aren’t familiar with Bitcoin, one question that’s probably running through your mind is “how does one earn Bitcoin?” and “how does Bitcoin relate to the environment”? To get Bitcoin, one must do something called “Bitcoin mining” on a high-powered computer. These computers solve extremely complicated computational math problems (it would take a human more than a million years to solve one). Once they finish solving, they are rewarded with some bitcoins. Because there is a limited amount of Bitcoin, competition increases as the algorithms ramp up in difficulty.
Since much computing power and energy are needed to gain only one bitcoin, people will buy multiple computers solely for mining. Moreover, as pictured below, people will use large areas like warehouses to store and power hundreds of computers. And thus, a lot of electricity is being used by Bitcoin miners to keep them running 24/7.
Picture of Bitcoin facility
Bill Gates maintains that “Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a great climate thing.” According to Digiconomist, one Bitcoin transaction -- yes, just one -- is equivalent to the same amount of power that the average American household uses in a month and a half. Think of it like this: you would have to go through 1,788,603 VISA transactions or watch 134,501 hours of YouTube to use the same amount of energy that a Bitcoin transaction employs. Their energy is primarily powered by fossil fuels, leading to a drastic increase in CO2 production each moment Bitcoin mining occurs. Keep in mind that carbon dioxide (and other air pollutants) causes global warming, which has dozens of terrible effects.
Now, perhaps you’re thinking, “can’t governments shut down Bitcoin or make them stop using fossil fuels?” Unfortunately, there’s one issue: no government body, organization, or person can track where Bitcoin is mined, nor can they tell what type of electricity is used. As a result, people can move their mining rigs from place to place without a trace. Additionally, just telling miners to use renewable energy isn’t that effective because fossil fuel energy is cheaper. I wish that there was a solution, but I believe the only action we can take is to inform others of the dangers that Bitcoin poses to our Earth.
Who knew virtual coins were that complex?
Learn more:
Tiffani Pe
The Carbon Newsprint
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