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Why clean energy won’t solve all Bitcoin’s pollution problems

March 14, 2019

Bitcoin has growing environmental problem, and renewable electricity isn’t the solution. That’s the conclusion of a new research paper published by economist Alex de Vries today.

In the paper published in Joule, de Vries, who has become known for his dire assessments of Bitcoin’s electricity consumption and carbon footprint, updates the gloomy news. The network, which like many others relies on a resource-intensive “mining” process to validate its distributed ledger, uses at least as much electricity annually as does Hungary, he says.

A single transaction consumes somewhere between 491 and 766 kilowatt-hours, estimates de Vries, compared with 0.4 kilowatt-hours consumed by a non-cash transaction by the traditional banking industry. And he calculates that a Bitcoin transaction emits somewhere between 233 and 364 kilograms of carbon dioxide, compared with 0.4 grams for a Visa transaction and 0.8 grams for a Google search.

Some dispute the argument by de Vries and others that Bitcoin presents a dire environmental problem, citing evidence that many mining facilities are located in areas that offer cheap renewable power. For instance, it’s been estimated that 48% of the world’s mining capacity is in the province of Sichuan, China, where there is lots of surplus hydropower. But de Vries writes that Sichuan’s hydro generating capacity is as much as three times higher during the wet season than when it’s drier. Though miners may take advantage of excess hydro at times, they are adding to the absolute demand on the grid all year, and during the drier season that demand must often be met with coal, he writes.

Using renewable energy also won’t solve the problem of Bitcoin-related electronic waste. According to de Vries, the pileup of obsolete mining chips promises to massively outpace e-waste creation by the banking sector. The network could make itself more sustainable by switching to a more resource-efficient process, like proof of stake, or by developing ways to execute more transactions without using the main blockchain, he concludes.

The methodology that de Vries uses to calculate Bitcoin’s electricity footprint has been criticized, perhaps most notably by Jonathan Koomey, an energy researcher who has published a number of papers on the energy use of data centers. But as Koomey himself acknowledges, it’s hard to know exactly how many mining rigs there are out there, where they are installed, and what kinds of cooling systems they use. The dearth of data leaves us second-guessing the scale of the potential problem.

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