Bitcoin has a bigger environmental impact than any other currency. People are making millions with cryptocurrency and buying luxury cars. But, more importantly, bitcoin is created through a process called bitcoin mining, which uses more energy than hundreds of individual countries. Today, bitcoin’s carbon footprint is bigger than Switzerland’s. As cryptocurrency becomes more popular, bitcoin carbon emissions will only continue to skyrocket.
How Crypto Millionaires Spend Their Money
One bitcoin was worth pennies in 2010. By the end of 2017, it’s value had peaked at almost $20,000. Anyone who had invested in bitcoin in the early days was looking at a cryptocurrency fortune by the end of 2017.
The beginning of 2018 was full of crazy stories about how cryptocurrency millionaires are spending their money. Everyone with a few bitcoins seemed to be buying Yeezy streetwear and Lamborghinis. There was, for a moment, a craze for buying Lamborghinis with bitcoin, just to prove that its a legitimate and insanely valuable currency.
Though this influx of luxury goods created a lot of buzz, most people opt to invest their money back into bitcoin. Bitcoin mining currently makes a little under $5 billion per year. However, it takes over $3.6 billion to mine all that bitcoin, according to this energy consumption index.
As it turns out, mining more bitcoin produces way more carbon dioxide emissions than driving a Lamborghini.
Bitcoin Produces More CO2 Emissions than Switzerland
Unlike other currencies that a federal reserve can print, bitcoin is decentralized, meaning that the only way to create bitcoin is through bitcoin mining. To mine bitcoin, you need to run specific software to solve complex math problems. The quicker you solve these problems (correctly), the more bitcoin you receive.
As mentioned, mining bitcoin emits a lot of carbon dioxide. Specifically, one bitcoin transaction takes 922 kWh, which is roughly the energy it takes to power 31.16 houses for one day. This translates to 451.72 kg of carbon dioxide per transaction and makes bitcoin’s annual carbon footprint an astounding 35,830 kt.
By comparison, 100,000 credit card transactions use around 25% of the energy it takes to process one bitcoin transaction, excluding the cost it takes to run a credit card office.
Today, bitcoin’s carbon footprint is bigger than Switzerland’s annual 35,306 kt in carbon dioxide emissions according to the World Bank.
The More Energy You Use, the More Bitcoin You Get
As the price of bitcoin goes up, the better the returns from mining it. In other words, you can justify paying for an insane amount of power—and generating a ridiculous amount of carbon dioxide—if one bitcoin is worth tens or hundreds of thousands of dollars.
When bitcoin’s price rises, the volume, and speed of mining will go up, too. Moreover, the faster you can compute proof-of-work algorithms, the more bitcoin you earn and the more energy you use.
In the short term, bitcoin mining’s carbon footprint is going to skyrocket. Though, over time, we’ll likely develop a more sophisticated way to mine cryptocurrency that prioritizes algorithms like proof-of-stake over proof-of-work. And if the world will move away from energy sources like coal, oil and natural gas, mining bitcoin will produce fewer carbon emissions.
Regardless, bitcoin mining cannot go on forever. We’ve already mined well over half the world’s total bitcoin.