Cryptocurrencies: Climate sinners Bitcoin or cash?
The question of the electricity consumption of the cryptocurrency Bitcoin has been a hotly debated topic for several years. But which is actually worse for the environment – Bitcoin or cash?
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£67,678.7715 408.3589 GBP 0.61%
14,290,763.2256 JPY 86,227.3479 JPY 0.61%
$91,142.9865 $549.9369 0.61%
509.8636 CHF -8.6542 CHF -1.67%
548.9847 EUR -9.3182 EUR -1.67%
478,0718 GBP -8.1146 GBP -1.67%
100,947.6294 JPY -1,713.4359 JPY -1.67%
$643.8192 -10.9279 USD -1.67%
14.8415 CHF 0.0412 CHF 0.28%
15.9803 EUR 0.0444 EUR 0.28%
13.9161 GBP 0.0387 GBP 0.28%
2,938.4648 JPY 8.1622 JPY 0.28%
$18.7408 $0.0521 0.28%
16.0996 CHF -0.0133 CHF -0.08%
14.1249 EUR -0.0015 EUR -0.01%
£12.3499 -0.0530 GBP -0.43%
1,833.7203 JPY -3.6182 JPY -0.20%
$16.2341 $0.0000 0.00%
$0.5939 $0.0018 0.31%
0.0020 BCH 0.0000 BCH 1.70%
0.0674BSV -0.0002 BSV -0.28%
0.0000 BTC -0.0000 BTC -0.61%
• Cryptocurrencies with high energy requirements
• Diffuse studies on specific data
• Dutch central bank studies cash climate impact
Cryptocurrencies and the climate: Digital currencies are repeatedly criticized for having a poor environmental balance. The fact that this is the case lies in the conception of cyber currencies. In order to be able to mine the blocks of the blockchain technology on which cryptocurrencies are based, a lot of computing power is required – and that eats up a lot of electricity. But not only mining itself is energy-intensive, every single transaction with an internet currency also uses a lot of energy. In addition, professional mining now requires special computers that are created solely for this purpose. Accordingly, a mining industry of its own has already developed, which has its own circuit of electrical products.
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But in addition to the high electricity consumption and the company’s own electrical production, what is particularly important in terms of the climate balance is that the electricity in question is not generated from renewable energies, but is instead created using fossil fuels. As Block Builders writes with reference to a study from May 2021, 65.08 percent of the monthly Bitcoin hashrate would have been reached in China, where cheap coal-fired electricity in particular is used for energy supply – to the detriment of the climate. However, the hashrate has now decreased due to the ban on Bitcoin mining in China.
Uncertainty about specific data on Bitcoin energy consumption
However, there is currently a somewhat diffuse study on how much electricity the Bitcoin network actually consumes. Alex de Vries from Erasmus University Rotterdam has calculated that the original cyberdevise has an annual energy consumption of 124.12 TWh. The annual CO2 footprint is 58.96 Mt. In addition, 15.15 kilotons of electronic waste would be produced per year. The University of Cambridge, on the other hand, has determined that annual Bitcoin electricity consumption is around 143.67 terawatt hours, as Block Builders writes. Analyst Dan Hold from ARK Invest, however, has calculated that Bitcoin mining uses 50.8 terawatt hours of energy annually. The different numbers come about because there is no reliable data on where exactly the Bitcoin miners are actually located and how large the proportion of renewable energies in their electricity mix really is. In any case, these are only estimates.
The Dutch central bank wants to know exactly
So if cryptocurrencies are supposedly harmful to the environment, the question arises as to how conventional payment methods fare and whether they are actually that much more environmentally friendly. The Dutch Central Bank also wanted to find out and for this purpose commissioned a study on the life cycle of cash, which was intended to examine the impact of the Dutch cash payment system on the environment and the climate. The entire life cycle of coins and notes was taken into account, i.e. from the production of paper, foil, etc., through printing, transport and use in everyday life to destruction. This was then not compared with Bitcoin, but with the use of credit cards. All of this was calculated for the year 2015.
The research team came to the conclusion that the Dutch cash payment system would pollute the climate with 17 million kg of CO2 equivalents (CO2e) annually. Broken down to a cash transaction, this would mean 4.6g CO2e. According to Alex de Vries’ crypto blog, Digiconomist, one Bitcoin transaction corresponds to a carbon footprint of 717.54 kg CO2, several times higher. Of course, the energy consumption of the Dutch cash system is not directly comparable to the estimated energy needs of the Bitcoin industry worldwide. However, as the news portal Basic Thinking writes, the bill serves to illustrate the question of which is more harmful to the environment, cash or Bitcoin.
Editorial team finanzen.net