The effect of cryptocurrency on the environment has been a subject of many discussions for a long time. People think cryptocurrencies harm the environment due to their contribution to carbon emissions and pollution. The issue gained more attention when Elon Musk announced Tesla would no longer accept Bitcoin due to its environmental impact.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Cryptocurrency mining is an energy-intensive process that uses massive amounts of electricity, inevitably affecting the planet. As more people invest in cryptocurrencies, the demand for mining rises. Bitcoin’s annual energy consumption peaked at 204.5 TWh (Terawatt hour) in 2022, a 1,906.87% increase from 2017’s 10.19 TWh.
To better understand cryptocurrency’s energy consumption, this article presents different facts about the power needed to produce these digital coins.
The Energy Consumption of Different Cryptocurrencies
As of March 2023, there were 22,2932 cryptocurrencies in existence. Producing each one requires energy, with some more than others. However, among all cryptocurrencies, Bitcoin is the most energy-hungry.
Bitcoin’s estimated annual energy consumption has increased to 137.68 TWh towards the end of the same year. A single Bitcoin transaction requires 703.25 kWh to complete. This energy can lighten an average US household for up to 24 days, based on a typical daily consumption of 29-30 kWh.
Aside from Bitcoin, other cryptocurrencies also require significant power for every transaction. The table below shows the approximate energy needed to cover single cryptocurrency transactions.
| Cryptocurrency | kWh per Transaction |
| Bitcoin | 703.25 |
| Ethereum | 0.03 |
| Bitcoin Cash | 18.96 |
| Litecoin | 18.52 |
| Cardano | 0.55 |
| Dogecoin | 5.7 |
| Ripple (XRP) | 0.01 |
Every cryptocurrency requires a different amount of electricity. However, the amount required for each Bitcoin is drastically bigger than its counterparts, making it the most energy-demanding crypto. One reason for this is its method of transaction–– its PoW.
| 💡 Did You Know? Among all cryptocurrencies, Bitcoin’s popularity is unrivaled. In fact, a post about Bitcoin shows up on social media every three seconds. The digital coin boasts 28,866 daily social media tags and mentions. |
What is Proof of Work (PoW)?
The purpose of cryptocurrency is to facilitate financial transactions without relying on any institution through a decentralized ledger. Simply put, it’s an alternative to traditional monetary and economic systems.
A significant issue with digital currency is double-spending, where digital money can be spent simultaneously at two or more places. A consensus mechanism known as Proof-of-Work (PoW) prevents this. It’s a process that confirms transactions through solving complex mathematical puzzles, then closes a block and opens a new one.
PoW involves miners competing to solve complex mathematical puzzles to validate transactions and add new blocks to the blockchain. As one can guess, this process requires substantial computational power and thus, energy consumption.
PoW’s energy expenditure has been a topic of concern for several years, often criticized for its environmental impact. The mining process can consume a considerable amount of electricity, primarily due to the need for high-performance computing equipment and cooling systems that prevent overheating.
For a clearer understanding of PoW, here’s an explainer video.
The next section compares cryptocurrency energy consumption to daily activities, sectors, and establishments. It also sheds light on its environmental impacts.
Shocking Facts on Crypto Energy Consumption
Decentralization, transparency, cheaper transaction fees, faster transactions, and global accessibility are what cryptocurrency can offer. It can alter how people use money and possibly become an alternative to traditional currency.
Despite all that, cryptocurrency has drawbacks, as it uses too much electricity. The following section discusses the most recent facts on cryptocurrency mining, transactions, emissions, and energy consumption.
Fact #1: Bitcoin alone is estimated to consume 137.68 terawatt-hours (TWh) a year, which is bigger than in some countries.
If Bitcoin were a country, it would rank among the top energy consumers in the world. Its annual energy consumption surpassed the 2021 figures of countries like Ukraine, Sweden, Netherlands, and Singapore. It’s even higher than the total electricity usage of 98 countries.
While impressive, that much energy devoured harms the environment. Studies show that Bitcoin and other cryptocurrencies have a significant carbon footprint, as they contribute to greenhouse gas emissions.
Fact #2: Bitcoin’s energy usage released 85.89 metric tons (Mt) of CO2 into the atmosphere.
Research by the United Nations University during 2020–2021 revealed the severity of Bitcoin’s impact on the planet.
Worldwide, Bitcoin mining, which is 45% dependent on fossil fuels, released 85.89 metric tons of carbon dioxide into the atmosphere. The carbon footprint was massive, equal to utilizing 190 natural gas-fired power plants or burning 84 billion lbs of coal.
The study further emphasized that to neutralize an emission of this size, governments would have to plant 3.9 billion trees. The operation would then have to cover an area the size of Denmark or Switzerland, or 7% of the Amvast azon rainforest, which is 6.7 million square kilometers.
| 💡Did You Know? Out of 195, five countries are ideal for blockchain and crypto startups. These are Switzerland, Malta, Bermuda, Slovenia, and Gibraltar. These nations are perfect because they have stable economies, better regulations on cryptocurrency trading, and offer cheaper energy resources. |
Fact #3: Bitcoin’s carbon footprint is 4 to 5 times greater than traditional currencies combined in a year.
Each traditional currency produces a carbon footprint from production to distribution. Producing banknotes and coins requires water, pesticides, fertilizers, and mined metals. Moreover, the extraction, mining, milling, and smelting of those metals are energy-intensive.
Online banking has its environmental impacts as well. Transactions online involve several stages, like card manufacturing, distribution, electricity expenditure for payments, and server processes. Each of these stages requires electricity and resources that affect the planet.
However, despite these energy-devouring processes, Bitcoin’s carbon footprint is still 4 to 5 times greater. Its CO2 emission is bigger than the sum of all forms of traditional currency processes in a year.
| 🎁 Bonus Fact: Blockchain and cryptocurrency can help banks save money. This is because procedures like money laundering checks, payment processing, reconciliations, compliance, and treasury operations can often result in bank losses. However, with the adoption of blockchain technology, banks are expected to save around $27 billion by the end of 2030. |
Fact #4: Ethereum’s energy consumption was reduced by 99.95%, making it one of the most eco-friendly cryptos.
According to the Cambridge Centre for Alternative Finance research, the annual electricity usage for Ethereum is now equal to using 587 air conditioners in a year. That’s smaller than what several famous buildings and global companies need.
Ethereum’s system can process an average of 400 million transactions in just a few minutes. With that much capacity for only 0.0026 TWh per year, Ethereum ranks with IOTA, XRP, and Chia as one of the most environmentally friendly cryptos available.
Just like Bitcoin, Ethereum used to require a lot of energy. In 2022, it consumed 46.31 TWh to 93.98 TWh annually. However, it overhauled its processes to mitigate this issue, creating Ethereum Merge. This network update transitioned it from a proof-of-work (PoW) to a proof-of-stake (PoS) consensus mechanism.
PoS consensus is more environmentally conscious. This means that the creation of the token Ether won’t require energy-intensive computers. Shifting from PoW to PoS reduced consumption by 99.95%.
Fact #5: Gold mining uses roughly the same energy as Bitcoin mining— around 130+ TWh annually.
Bitcoin is often referred to as digital gold. Many studies have even compared Bitcoin to the precious metal regarding prices, returns, and volatility. However, among all those categories, the two are most alike in energy expenditure.
While Bitcoin’s energy use spans many countries, it’s not too far from gold’s. Gold mining devours 132 TWh of electricity yearly, only 5 TWh behind Bitcoin’s 137.68 TWh.
It’s essential to compare the energy usage of cryptocurrencies with various industries to understand their environmental impact better. It also raises public awareness about the implications of various cryptocurrency transactions on global energy consumption.
Fact #6: A small-scale crypto-mining operation with 10 rigs would require around 100 solar panels.
Shifting to more sustainable energy sources can optimize the Bitcoin mining process. Using a mixture of solar, wind, and hydropower can improve its profitability while helping efforts to combat climate change.
Solar power, in particular, is a popular choice for miners. However, setting this up would depend on the hardware’s efficiency, operation size, and available sunlight.
For instance, a single Bitcoin mining rig can devour 500 W to 1.5 kW of electricity. It would take 10 solar panels, each capable of producing 300 W, to power a 1.5 kW rig. Following that arrangement, you’d need 100 panels to run a small-scale mining operation.
The energy requirement for solar-powered mining rigs also depends on the number of Graphic Processing Units (GPU) used. Typically, this rig needs about 400-500 W daily, but it can consume more if more GPUs are used.
Fact #7: The Sahara desert can power 1.25 trillion Bitcoin transactions.
Sahara is the largest and hottest desert in the world, covering approximately 9 million square kilometers of North Africa. It’s also one of the most promising places on Earth for harvesting solar power, the most abundant energy source.
According to the World Economic Forum’s 2020 report, if every ray of sunshine that hits the Sahara were converted into energy, it could produce enough electricity to power Europe 7,000 times. That said, the desert has the potential to power an astonishing 1.25 trillion Bitcoin transactions. This fact demonstrates the vast energy-generating capabilities of renewable resources.
Fact #8: The energy spent in 1 Bitcoin transaction equals nearly 500,000 visa transactions.
Paying through your Visa card typically consumes only 1.49 Wh on average. In stark contrast, a single Bitcoin transaction is so complex that it demands electricity.
To put it into perspective, the energy required to transfer a Bitcoin value on the blockchain is massive. You’d have to make 473,155 Visa card transactions to match it.
Visa alone already consumes terawatts of energy. The brand owns approximately 42% of the global credit market, making it one of the largest payments providers. In 2022, 242 billion purchase transactions were made using Visa, so being dwarfed by Bitcoin highlights the latter’s alarming energy expenditure.
Fact #9: A single Dogecoin transaction creates 3.18 kg of CO2.
As with all cryptos, Dogecoin contributes significantly to carbon emissions with each transaction. For example, Dogecoin consumes 5.7 kWh of energy in a single payment. That amount could power an average American residence for nearly 5 hours.
Dogecoin’s energy expenditure for every transaction leads to 3.18 kg of CO2. That’s equal to 7,048 VISA payments or 2 hours of YouTube.
The environmental impact of Dogecoin isn’t far from Bitcoin’s, as it operates on the same Proof-of-Work (PoW) mechanism. Again, this emphasizes the need to address the sustainability concerns associated with blockchain technologies.
Fact #10: Bitcoin’s energy consumption surpassed the combined electricity usage of the 10 poorest countries in the world In 2021.
In 2021, the 10 most economically challenged nations collectively expended 160 TWh of energy, a figure surpassed by Bitcoin’s substantial electricity consumption of 204.5 TWh. This event emphasizes the immense energy requirements of the cryptocurrency industry. Notably, even Ethereum consumed more energy than the combined expenditure of 8 countries in the same list.
The table below shows the ten most economically disadvantaged countries with total energy consumption.
| Country | Energy Consumptionin 2021 | GDP(USD Million) |
| South Sudan | 8 TWh | 6.267 |
| Burundi | 4 TWh | 3.190 |
| Central African Republic | 2 TWh | 2.760 |
| Somalia | 4 TWh | 11.515 |
| Democratic Republic of the Congo | 39 TWh | 67.512 |
| Mozambique | 72 TWh | 21.936 |
| Niger | 10 TWh | 17.073 |
| Malawi | 9 TWh | 13.176 |
| Chad | 6 TWh | 12.596 |
| Liberia | 6 TWh | 4.347 |
Based on the facts, cryptocurrency’s ever-rising popularity has sparked concerns about its alarming energy consumption and impact on the planet.
As the debate on the ecological footprint of these digital coins heats up, understanding the factors that drive them becomes crucial. That’s especially true if a balance between technological innovation and environmental sustainability is what everyone is after.
Factors Affecting the Impact of Cryptocurrency On The Environment
Several factors cause the environmental repercussions of crypto. Unless these factors are altered or optimized to reduce their footprint, the warming impact resulting from the increasing levels of greenhouse gases in the atmosphere will persist.
- Crypto mining involves demanding processes, particularly Proof-of-Work. Bitcoin miners use this mechanism as a form of cryptographic proof where one proves to others that a specific computational effort has been made. This process demands a lot of electricity and mainly relies on fossil fuel-based sources, contributing to greenhouse gas emissions.
- Cryptocurrency mining requires specialized hardware, contributing to global e-waste. Computers and other devices used for crypto mining have a limited lifespan, and as technology advances, the difficulty of mining cryptocurrency increases. The old devices are becoming obsolete and need to be discarded, adding to global e-waste.
As of May 2021, Bitcoin’s e-waste produces 30.7 metric kilotons annually. This number is comparable to small IT and telecommunication equipment waste produced by a country like the Netherlands.
- Crypto mining takes up space and impacts land usage. Unlike before, cryptocurrency can be mined at home using a personal computer. Mining is more difficult now and calls for more sophisticated computers and larger areas. Dedicated spaces like warehouses store cryptocurrency mining equipment like data centers.
Buildings used for crypto mining can lead to land consumption and the resources near it, potentially impacting local ecosystems and biodiversity.
Cryptocurrency’s environmental impacts are complex, and they vary depending on different factors. The eye-opening facts above help raise the concern that crypto’s growing industry should be further regulated with more emphasis on protecting the environment.
Wrap-Up
Cryptocurrency may have the potential to alter the way people use money. It can decentralize traditional money, provide cheaper and faster transactions, and can be accessed globally. However, beneath those perks are terawatts of spent energy and environmental consequences.
The energy needed to acquire this digital currency is alarming and greatly impacts the planet. Realizing the impact of cryptocurrency on the environment should encourage everyone to develop new technologies for a sustainable future–– miners included.
FAQs on Crypto Energy Consumption
Is crypto more energy efficient?
Proof-of-Work (PoW) crypto uses vastly more energy than credit cards. Replacing PoW with other consensus mechanisms is the first green leap for crypto, and using permissions systems is the second.
Is Bitcoin energy consumption sustainable?
Currently, the systems running crypto rely on fossil fuel sources for energy, so it’s not sustainable. However, because the Bitcoin network runs 24/7/365, it can use renewable energy at all hours of the day and during any season.
How long does it take to mine 1 BTC?
It takes about 10 minutes to mine 1 Bitcoin (BTC).
What cryptocurrency uses the most energy?
Among all cryptocurrencies, Bitcoin is the most energy-consuming.
Does crypto mining damage GPU?
Mining increases a rig’s temperature. A GPU could run at 80°C or more for a long time, drastically shortening its efficiency and lifespan.
Sources
- Statista
- US Energy Information Administration
- Statista
- Easy Crypto
- Coin Telegraph
- BTC Peers
- Digiconomist
- EZ Blockchain
- United Nations University
- Rocky Mountain Institute
- Statista
- ScienceDirect
- ScienceDirect
- Manila Bulletin
- Ethereum.org
- The Times
- Digiconomist
- Medium
- EZ Blockchain
- World Economic Forum
- Statista
- Global Finance
- Our World in Data
- International Monetary Fund
- Investopedia
- Yahoo Finance
- Money Supermarket
- Coindesk
- Time
By Artem Minaev
Artem is a management consultant with a strong background in marketing and branding. As a valuable member of the core team at TechJury.net, he holds the position of Chief Growth Officer, leveraging his expertise to drive the growth and success of the website.