In the U.S. In the US, Bitcoin mining generates approximately 40 billion pounds of carbon emissions. Proof-of-work mining requires a lot of computing power, which uses amounts of electricity capable of feeding countries. The cryptocurrency industry seeks to reduce 100% of its carbon emissions by 2030.
There is no direct way to calculate how much energy is used for Bitcoin mining, but the figure can be estimated from the network hashrate and consumption of commercially available mining rigs. The Cambridge Bitcoin Electricity Consumption Index estimates that Bitcoin, the most mined cryptocurrency network, uses about 136.38 terawatt hours of electricity each year more than the Netherlands, Argentina or the United Arab Emirates. Another estimate from Digiconomist, a cryptocurrency analytics site, puts the figure at 204.5 terawatt-hours. This calculates about 2,145 kilowatt-hours of electricity per transaction, the same amount of energy consumed by the average American household over 73.52 days.
Ethereum, the second-largest cryptocurrency network, is estimated to use 112.6 terawatt-hours of electricity per year more than the Philippines or Belgium require. The average Ethereum transaction required 268.6 kilowatt-hours of electricity, which is the same amount of energy as an average US. UU. There are more than 15,000 different cryptocurrencies and more than 400 exchanges around the world.
None of the reports or calculations on energy use in cryptocurrencies explain the energy spent to develop new currencies or manage services for them. Each Bitcoin transaction is estimated to use around 2100 kilowatt hours (kWh), which is roughly what an average American household consumes in 75 days. When this energy is supplied from non-renewable energy sources, cryptocurrencies such as Bitcoin can generate exorbitant greenhouse gas emissions. Bitcoin's annual carbon footprint is comparable to the release of 97.2 megatons of carbon dioxide, roughly the nationwide annual emissions of Argentina.
We spoke to Joseph Raczynski, resident technologist at Thomson Reuters & futurist and pioneer in adopting cryptocurrency, about crypto mining, the cost to the environment and its sustainability in the future. For years, bitcoin critics have defamed the world's largest cryptocurrency for polluting the planet. But new data from the University of Cambridge shows that the geography of mining has changed dramatically over the past six months, with experts telling CNBC that this will improve bitcoin's carbon footprint. Farrokhnia teaches blockchain, cryptocurrencies and demystified digital tokens at Columbia Business School.
Popular cryptocurrencies such as Bitcoin and Ethereum operate on what is called a proof-of-work (PoW) system, which depends on people having to solve equations of varying difficulty in order to mine new coins and add new blocks of information to the blockchain of a digital currency. As a result, miners need to look for the cheapest electricity and upgrade to faster, more energy-intensive computers. In addition, because rewards are continuously halved, for mining to be financially worthwhile, miners have to process more transactions or reduce the amount of electricity they use. While the world is grappling with the best way to combat climate change, we have identified fossil fuels, agriculture and industrial pollution as the main offenders, but in recent years, the discussion has focused on cryptocurrencies.
Recently, however, China cracked down on mining due to concerns about the financial risks of cryptocurrencies and the huge energy consumption that goes against China's goal of being carbon neutral by 2060. Cryptocurrency is rapidly emerging as a major emitter of greenhouse gases, contributing to air and water pollution and threatening New York State's goals of reducing emissions. Although China was still in first place in April, with a 46% share, the US market share is likely to be much higher now since the Chinese government boosted miners in May. Because large-scale miners compete in a low-margin industry, where their only variable cost is energy, they are encouraged to migrate to the cheapest energy sources in the world.
Efforts to make cryptocurrencies greener include the use of methane gas from fossil fuel drilling that usually burns, and installing plants in areas where wind power is abundant, such as West Texas. Mining, particularly Bitcoin mining, uses an immense amount of energy, while the race among aspiring crypto millionaires to build the most powerful mining platform produces far more electronic waste than fat bank accounts. The Cryptoclimate Agreement is another initiative, backed by 40 projects, with the goal of making blockchains run on 100% renewable energy by 2025 and the entire cryptocurrency industry reach net zero emissions by 2040. Bitcoin, the largest cryptocurrency in the world, accounting for more than half of all cryptocurrencies, can be used to buy cars, furniture, vacations and much more.
In response to criticism from activists, Ethereum, the second largest cryptocurrency, has hinted at changing its PoW system to a proof-of-stake (PoS) system, which randomly chooses one person at a time to resolve the blockade, reducing energy consumption by 99%. Without physical money or a central authority, cryptocurrencies had to find a way to ensure that transactions were secure and that their tokens could not be spent more than once. . .