September 2019: requires more computing capacity than previously anticipated and experts are calling to link the currency with renewable energy requirements to mitigate any knock-on effects for the energy sector and the currency’s overall carbon footprint.
Information
The mining of crypto currencies such as Bitcoin causes higher CO2 emissions than assumed previously. Virtual currency transfers rely on mathematical ‘puzzles’ being solved by arbitrary computers within their global network. This process requires large computing capacities and the energy use for Bitcoin alone quadrupled in 2018. New evidence confirms that t cryptocurrencies continues to be powered by fossil-fuel derived energy. 68% of the Bitcoin computing power is located in Asia, 17 % in Europe, and 15% in North America, impacting the energy consumption and overall carbon footprint.
Implications & Opportunities
The rise of cryptocurrencies such as Bitcoin may lead to additional burden on the climate. This could be mitigated by means of linking large-scale mining operations to renewable energy initiatives; thus, there are increasing calls for policies to impose stronger environmental regulations on cryptocurrencies. Further, there may be opportunities for linking cryptocurrencies to other location-specific renewable energy systems such as in Iceland. The increase use of cryptocurrency in Iceland promoted using geothermal energy to power computers and use cooler outside locations to prevent the computer systems from overheating.
Limitations
The transboundary nature and limited jurisdiction-specific regulations often lead to limited data availability and challenge the measurement of virtual currencies’ carbon footprint. Therefore, many studies use various estimates or approximations as basis for their calculations and new studies should be seen within the context of real-life data and estimated variables to inform conclusions.
Sources
Stoll, C., Klaaßen, L., & Gallersdörfer, U. (2019). The Carbon Footprint of Bitcoin. Joule. doi:10.1016/j.joule.2019.05.012
Business Standard. (2019). Bitcoin causing annual CO2 emissions comparable to those of Vegas: Study. Retrieved from https://www.business-standard.com/article/pti-stories/bitcoin-use-causing-co2-emissions-comparable-to-las-vegas-study-119071900858_1.html
