The environmental impact of Bitcoin (BTC) mining and transaction processing has long been a point of contention. However, many cryptocurrency devotees argue that this impact is mitigated by using renewable energy sources like hydroelectric power. These present a ‘green’ solution for Bitcoin mining issues.

A new report published in the journal Joule by Alex de Vries suggests that this is not the case. In fact, the blockchain specialist argues that the environmental impact of Bitcoin transaction processing is far worse than legacy systems.

Bitcoin Electrical Costs

According to de Vries, calculating Bitcoin transaction costs can be complex. However, a set of simple calculations suggests that Bitcoin mining costs far more than any other financial system. Based on these calculations, the Bitcoin energy cost is more than many small nations. Per the author:

“We find that the Bitcoin network, with an electrical energy footprint of 491.4 to 765.4 kilowatt-hours per transaction on average, is relatively much more energy hungry than the traditional financial system. The resulting electronic waste generation could equal that of a small country like Luxembourg, with a staggering average footprint of four light bulbs worth of electronic waste per processed Bitcoin transaction.”

Wet or Dry?

Such calculations have long been the argument against the cryptocurrency, but further analysis was needed in order to compare these costs with ‘green’ alternatives. The main point of contention is related to the Sichuan province in China, where nearly 50 percent of processing takes place.

However, the report indicates that energy production in the region drops drastically during the dry season. At that time, additional power must be imported to maintain the network, causing more carbon usage.

This usage can be dramatic when compared to Visa or other financial networks. Based on de Vries’ calculations, a single Bitcoin transaction generates approximately 233 to 363 kgs of carbon dioxide. A Visa transaction, however, generates just a few grams.

This massive energy need may drive a growing power generation network, which would increase environmental costs. He notes:

“In the worst-case scenario, it presents an incentive for the construction of new coal-fired power stations to fulfil this purpose.”

The Proof Debates

This most recent report should further ignite the ‘proof’ debates regarding how to process transactions. Ethereum most recently has suggested that a shift to Proof of Stake (PoS) rather than Bitcoin’s Proof of Work (PoW) would solve the environmental crisis. This shift was supposed to occur during the now-delayed Constantinople hard fork.

However, as the delay shows, the PoS protocol for block generation still has a number of bugs. In fact, the issues were so dramatic that some have called for a complete closure to the PoS protocol option for security reasons.

Nevertheless, the Bitcoin network has come under increasing scrutiny. For maximalists, this is not an issue. However, for adoption to continue, some solutions must be found. de Vries’ report makes it clear that renewable energy sources cannot solve the conundrum.

“Given the fundamental challenges in uniting Bitcoin mining with renewable energy, along with the fact that energy use is not the only way in which Bitcoin impacts the environment, we should conclude that renewable energy is not the answer to Bitcoin’s sustainability problem.”

Further Research Necessary

While it is certain that growth in Bitcoin transactions will require more energy, the solution is not immediately apparent. This most recent report only highlights an issue that has already been clear in the community.

While the PoS option is still being considered, the cryptocurrency community must come together to analyze other potential solutions to the problem. Whether Bitcoin remains the dominant currency or not, the future of cryptocurrency depends on increased research and creative solutions.

Think Bitcoin’s environmental impact will eventually lead to the end of the network, or will other solutions present themselves? Let us know in the comments below!

Jon Buck

With a background in science and writing, Jon's cryptophile days started in 2011 when he first heard about Bitcoin. Since then he's been learning, investing, and writing about cryptocurrencies and blockchain technology for some of the biggest publications and ICOs in the industry. After a brief stint in India, he and his family live in southern CA.

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