Bitcoin’s Terrible Impact on Energy Consumption and Ecology

Bitcoin’s growth since its launch in 2009 has been incredible. From costing under $1 in 2010 to $19,000 in 2017, bitcoin has broken records no one thought it would. But amid the high growth rate, there have been numerous discussions about the digital currency’s impact on the environment. Unlike real money which is printed by governments, bitcoins are released into circulation through an energy-consuming process known as mining.

What is Bitcoin Mining?

Bitcoin mining is the process through which new bitcoins are introduced into circulation. It involves verifying transactions on the bitcoin network and adding them to the decentralized, public ledger known as the blockchain. The blockchain is one of the most popular inventions in the cryptocurrency industry. It was popularized by Satoshi Nakamoto after he launched bitcoin in 2009. While Satoshi’s real identity has never been revealed, the blockchain and bitcoin have kept his name popular ever since.

How is Energy Consumed while mining bitcoins?

The mining process does not just involve verifying transactions on a normal personal computer. It’s a more complicated process that involves the use of state of the art hardware. The hardware machines used are known as Application-specific integrated circuits (ASICs). In addition to having the right ASIC machine, a miner must also have a software program to help solve specific math puzzles.

Equipment and Software used to mine bitcoins

  • Application Specific Integrated circuit (ASIC) machines
  • Personal computer.
  • Bitcoin mining software- the most popular mining programs are BFG miner and CG miner.
  • A bitcoin wallet to secure the bitcoins they get a reward for their mining efforts.
  • Join a mining pool- bitcoin mining is difficult and requires the effort of many miners to complete a blockchain. Miners involved share the rewards.
  • Power source- bitcoin mining is a power consuming process. Most miners tend to use solar energy or mine in states with lowest power costs.

With the right hardware machine and software program, a miner competes against other miners to earn the right to verify a bitcoin transaction. The ASIC machines miners use to identify a genuine transaction by constantly guessing from a list of complicated math puzzles. It takes on average 10 minutes to verify one bitcoin block. Once a block is confirmed, it is added to the blockchain where it cannot be altered.

Since the mining process is a random guess, miners spend a lot of energy attempting to verify a block. In most cases, the mining machines fail more often than they succeed in confirming a transaction. Each ASIC machine consumes a certain amount of energy every time. And given that the machines consume more energy than normal computers, the overall impact of bitcoin mining is mind-blowing.

What’s the Purpose of bitcoin mining?

Bitcoin was developed as a decentralized, digitized platform. There is no manager or intermediary to facilitate payments done in bitcoins. Through the blockchain, thousands of computer owners can take part in helping run the bitcoin network. They do this by verifying bitcoin transactions. The blockchain is also publicly available.

Features of the blockchain

  • Transparent- the blockchain is a public ledger. Anyone can access it and verify a transaction
  • Eliminates intermediaries- the blockchain eliminates the need to send payments through banks. This makes the transaction process faster and cheaper.
  • User controlled- the blockchain is managed by thousands of computer networks.

Due to the unique and progressive benefits associated with blockchains, bitcoin mining has withstood the strong criticism about power wastage. Nevertheless, it’s undeniable that the mining process does a lot of damage to the environment.

Bitcoin Mining’s Astonishing Power Consumption

According to a study by Digiconomist, bitcoin mining accounted for 29.05 terawatts of electricity in 2017. That equates to 13% of all energy consumed by the world as of November 2017. Bitcoin mining ideally consumes more power than Nigeria, Africa’s largest economy and one of the most populous countries in the world.

In the developed world, bitcoin mining consumes more power than the whole of Ireland. Globally, bitcoin mining consuming much more power than 159 countries. If bitcoin were a country, it would rank at position 61 among countries with the highest power consumption. Individually, each bitcoin mining rig consumes 215 kilowatt-hours to validate a single bitcoin transaction.

The total amount of power consumed by bitcoin mining could provide lighting needs to almost 3 million American homes. The 215 KWh used to confirm a bitcoin transaction is the equivalent of what an average American home spends in a week.

According to Digiconomist, the power used to validate a single bitcoin transaction can:

  • Power two Tesla (the American electric car) batteries.
  • Power a refrigerator for a whole year.
  • Boil 1.872 tons of water.
  • Provide enough power to an average sized American home for all the activities they need for a week.

The Negative Impact of Bitcoin Mining

The main problem with consuming too much power is that it leads to carbon emissions. This has a negative impact on the environment. Excessive carbon emission raises weather temperatures by trapping solar energy in space. Without solar energy, weather patterns change.

Main Effects of Carbon emissions

  • Leads to severe weather patterns- global warming can be linked to catastrophes such as hurricanes.
  • As carbon emission contributes to rising temperatures, water become scarce.
  • The changing weather patterns last for decades- apart from global warming having adverse effects on the ecology, the impact could be felt for decades.

What can be done to reduce the energy costs?

While bitcoin miners worry about the huge cost of mining hardware, environmentalists want to know how the problem of bitcoin power consumption should be approached.

One of the methods cryptocurrencies are using to solve that problem is by introducing proof of stake system to validate transactions. Through this system, a miner is limited to mining a percentage of transactions based on how many coins she or he owns. For example, someone who owns 1% of bitcoins available in circulation can only mine 1% of bitcoin transactions.

Some cryptocurrencies use a mix of proof of work and proof of stake systems. The proof of stake system is what bitcoin and litecoin use to validate transactions. Cryptocurrencies that use a combination of both systems argue that the proof of stake system can be vulnerable to misuse by anyone who owns 51% of all cryptocurrencies on the network.


Bitcoin’s success in the future will highly depend on how it manages to minimize the problem of power consumption. And since its founder Satoshi Nakamoto no longer publishes any reports, the responsibility lies on the mining pools and developers.

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Abhishek Kumar Jha
Abhishek Kumar Jha
Knowledge is Power



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