Bitcoin has already used more power so far this year than it did in all of 2020, a new study has suggested, as the debate on the impact of cryptocurrency mining on the environment heats up.
Bitcoin is set to use 91TWh of energy by the end of this year, according to a Bloomberg report, which noted this is as much energy as Pakistan. Last year, Bitcoin was estimated to have consumed about 67TWh of electricity.
While tracking how much energy Bitcoin mining uses is difficult, the trend is clear. The Cambridge Bitcoin Electricity Consumption Index estimates that Bitcoin will consume 95.68 TW/h by the end of the year, which is about the same as the power consumption of the Philippines.
Bitcoin uses a system called "proof of work", the mechanism is used to confirm transactions and add new blocks to the chain. Its decentralised system requires a global network of computers to run at the same time when a transaction takes place. This is why it uses so much energy, as it is designed to encourage increased computing effort.
Bitcoin could switch to the less energy-consuming "Proof of Stake" mechanism, which randomly allocates coins to users who put up their own tokens as collateral.
The Bloomberg report said as the price of Bitcoin increases, more miners with less energy-efficient machines are joining the network, which then drives up energy use.
The report said it was "essential to improve the efficiency of crypto-mining and move to low-carbon energy sources for electricity".
But it's not just the running of Bitcoin mining that is costing the environment. The computer equipment used for mining typically only lasts for one and a half years. It can not then thrown out afterwards because the equipment can only be used for mining.
Science Direct found that as a result, one transaction on the Bitcoin network produces 272 grams of electronic waste.
One of the most prominent figures to add to the crypto environmental debate is the Tesla chief executive officer Elon Musk.
Earlier this year he said the electric car company would accept Bitcoin as payment, but environmentalists later convinced Musk to backtrack on his decision.
Musk subsequently announced the company would not accept crypto payments for Tesla vehicles again until at least 50 per cent of mining operations using green energy. But this has not yet happened.
Cryptocurrency experts have previously told Euronews Next that crypto miners have no incentive to make greener choices.
Governments are also weighing in on the debate. China and Iran temporarily halted Bitcoin mining due to the massive energy use that was causing power cuts in some areas.
In the United States, Senator Elizabeth Warren butted heads with two cryptocurrency CEOs.
Earlier this month she tweeted a New York Times article on the environmental impact of cryptos and wrote: “Bitcoin mining consumes roughly the same amount of electricity as Washington state—putting pressure on our power grids and worsening the #ClimateCrisis. We need to protect our planet and crackdown on environmentally wasteful crypto mining practices.”
In response, CEO of MicroStrategy, Michael Saylor, tweeted: "#Bitcoin mining converts wasted & stranded energy into digital energy, the natural successor to chemical & electrical energy. It can be managed by any computer, transferred anywhere at the speed of light, and lasts forever, thereby improving our climate, economy & power grid".
Meanwhile, FTX CEO Sam Bankman-Fried, responded to Warren in saying Bitcoin mining could be improved but that it is "in line with its economic impact".