Bitcoin, cryptocurrency, and the blockchain technology it relies upon have been hailed as the future since their emergence a decade ago. The rise of cryptocurrency, especially Bitcoin, has transformed economic transactions and continues to shape the economy, technology, and society. However, it’s essential to understand Bitcoin’s impact on the environment as its influence grows.

Cryptocurrency is a digital transaction, so it might seem unrelated to energy consumption and climate change. But this is not the case. The widespread use of cryptocurrency has major ramifications for energy usage and the climate. In particular, Bitcoin’s impact on the environment is a growing concern. As global warming remains a critical issue, the impact of technologies like cryptocurrency needs urgent attention.

Being so closely associated with the revolutionary possibilities presented by futuristic technology, it may come as a surprise to many that Bitcoin yields such an impact on our energy consumption. In order to better understand the relationship between Bitcoin and our global warming problem, it’s necessary to understand the mechanics of cryptocurrency, its use of electrical power, and the impact this may have on our environment. Students tasked with a global warming essay or a Bitcoin essay may be surprised to discover just how easily these can be combined, as Bitcoin is shaping up to have an increasingly-significant impact on our environment.

How does Bitcoin work

While Bitcoin has become a fairly ubiquitous word, there are many who still don’t understand its mechanics beyond it being a “digital currency.” Bitcoin, as a currency, is built on top of a network technology known as the blockchain.

Blockchain technology is a key factor behind Bitcoin’s popularity. It operates through a public, secure, and distributed network. Many computers are connected via the internet. Together, they create, store, and verify digital transactions. This process is highly secure and fast. It also ensures anonymity for users.

Bitcoin then uses this network of interconnected, privately secured computers to form a digital “ledger” that regulates and keeps track of transactions. One of the unique things about Bitcoins is that blockchain allows it to operate as a decentralised currency – without the need for a central bank or treasury as is the case with traditional currencies. In order to “create” the coins, computers engage in what is known as Bitcoin mining. This requires a computer to dedicate itself to solving complex equations, for which it is rewarded with Bitcoins. The computing power necessary to perform these complex equations and transactions is where the question of energy consumption and global warming comes into play.

Bitcoin’s energy consumption

Bitcoin mining is an incredibly sophisticated process that requires high levels of mathematics. As a result, the computers involved consume a large amount of energy. The sheer scale of energy consumption may be surprising. Some estimates suggest that Bitcoin’s annual carbon footprint could rival the energy consumption of entire nations, such as New Zealand or Argentina. Digiconomist has created a Bitcoin Energy Consumption Index to track this enormous energy demand.

To put it into perspective, processing a single Bitcoin transaction requires the same amount of power as several hundred thousand transactions processed by other systems, such as Visa or Mastercard. As Bitcoin grows in popularity, more miners are joining the network. The increasing value of Bitcoin only adds more incentive for miners to compete for those valuable digital coins. This spells even an even more harmful future when it comes to Bitcoin’s climate impact.

Bitcoin and sustainable business

The environmental impact of Bitcoin is a major concern for both the climate and companies. Blockchain technology, with its futuristic appeal, has made Bitcoin a favorite among companies that claim to be eco-friendly. Firms like Tesla, PayPal, and Square are known for their environmental initiatives. However, each has shown an interest in using or purchasing Bitcoin.

As more computers engage in mining and consume large amounts of electricity, Bitcoin’s environmental impact worsens. This will increase calls for corporate accountability. How these companies reconcile their eco-friendly claims with their use of cryptocurrency is an urgent issue.

Solutions for Bitcoin’s climate future

The hope for many, both those who mine cryptocurrency and those who utilize it, is that the energy consumption required to power the network can be shifted towards sustainability. Corporate proponents of cryptocurrency have come out speaking in favor of using clean energy for the production, transaction, and monitoring of the currency. This would help mitigate Bitcoin’s impact on environment while maintaining its widespread adoption.

One solution being discussed is using cryptocurrency as an incentive to build green infrastructure. Companies could construct new green energy power stations. The excess energy produced could be used for cryptocurrency mining. In this way, companies can generate extra profits from their power plants. The energy demands of cryptocurrency technology might, in this case, serve as a positive incentive. This could help drive the construction of sustainable power production infrastructures.

Whether the future of Bitcoin holds more positives or negatives, in the long run, has yet to be shown. One thing that’s for sure, however, is the fact that even the processes going on around us that feel like the least physical can have a major physical impact on the world around us. In the end, everything is connected, and everything connects back to our environment.