A recent study conducted by the United Nations has raised concerns about the possible impact of Bitcoin (BTC) on the overall environment.
According to the study results published by the United Nations University and Earth’s Future, although Bitcoin ranks as the most popular cryptocurrency, it carries ‘concerning impacts on climate, water, and land’ stemming from its mining activity.
“The surge in the crypto market is comparable to the gold rush. Yet, this exciting market has a hidden dark side. Mining cryptocurrencies can have major environmental impacts on climate, water, and land,” the research said.
Breakdown of Bitcoin energy consumption
The study examined the activities of 76 Bitcoin mining nations during the 2020–2021 period. During this timeframe, the global Bitcoin mining network consumed 173.42 Terawatt hours of electricity, placing it 27th in the world if it were considered a country, ahead of populous nations like Pakistan.
This energy consumption resulted in a carbon footprint equivalent to burning 84 billion pounds of coal or operating 190 natural gas-fired power plants.
The study also highlighted the heavy reliance of Bitcoin mining on fossil energy sources, with coal accounting for 45% of Bitcoin’s energy supply mix, followed by natural gas at 21%. Renewable sources like hydropower, though impactful on water resources, provided 16% of the electricity demand. Nuclear energy contributed 9%, while solar and wind energy accounted for 2% and 5%, respectively.
Additionally, the water footprint of Bitcoin mining was equivalent to the amount needed to fill over 660,000 Olympic-sized swimming pools, enough to meet the current domestic water needs of over 300 million people in rural sub-Saharan Africa. Furthermore, the land footprint of worldwide Bitcoin mining activities during this period was 1.4 times the area of Los Angeles.
The need for a regulatory framework
Notably, the researchers pointed out that the findings should not discourage the use of digital assets.
“Technological innovations are often associated with unintended consequences, and Bitcoin is no exception. <…> Our findings should not discourage the use of digital currencies. Instead, they should encourage us to invest in regulatory interventions and technological advancements that improve the efficiency of the global financial system without harming the environment,” said Professor Kaveh Madani, who led this study.
Interestingly, China emerged as the largest Bitcoin mining nation significantly, followed by the United States, Kazakhstan, Russia, Malaysia, Canada, Germany, Iran, Ireland, and Singapore.
In light of these findings, the UN scientists proposed a range of recommendations to governments for monitoring and mitigating the environmental impacts of cryptocurrencies. They also advocated for investment in more energy-efficient digital currencies that have less adverse environmental effects.