The Financial Times published a story on May 21 entitled “Bitcoin’s Growing Energy Problem: ‘It’s a Dirty Currency'”. The full article is excerpted below.
For years, academics have been gauging the intensity of Bitcoin’s energy consumption. So far, governments, environmental charities, and the banks and exchanges that facilitate the massive cryptocurrency industry have largely ignored the problem.
Bitcoin alone uses as much electricity as a medium-sized country in Europe, and that electricity use is staggering,” said Professor Brian Lucey of Trinity College in Dublin, Ireland. It’s a dirty industry, it’s a dirty currency.”
Economic authorities are starting to take notice. The European Central Bank said Wednesday that the “excessive carbon footprint of crypto assets is a concern.
The exact energy consumption of bitcoin has itself become a topic of much debate.
The latest calculations from the Bitcoin Electricity Consumption Index at the University of Cambridge in the United Kingdom show that Bitcoin mining uses 133.68 terawatt hours of electricity per year.
This compares to 131.8 TWh for Sweden and 147.21 TWh for Malaysia in 2020.
And the true power consumption of Bitcoin is probably much higher: the underlying reasons are that the rising price of Bitcoin is attracting new miners and that it’s more cost-effective to mine with older, less efficient equipment.
Bitcoin is not the only energy-intensive cryptocurrency, but it is by far the most energy-intensive.
Bitcoin could be the first inefficient disruptive technology,” said Dr. Larissa Yarovaya, a lecturer at the University of Southampton in the United Kingdom. For the good of the planet, it should die out and be replaced by a new model. It consumes more electricity than a country. All the rest is secondary.”
She said, “It’s common sense. A high bitcoin price cannot justify (energy consumption). It is a speculative asset that does not create a lot of jobs and is not widely traded.”
However, such concerns have not sparked a groundswell of environmental groups. “Friends of the Earth has said it is exploring the issue; so has Greenpeace, whose U.S. branch began accepting bitcoin donations in 2014.
Investment banks continue to be involved in the cryptocurrency industry, despite publicly declaring their commitment to sustainability goals. None of the banks wanted to comment on the issue of energy consumption.
Yarovaya said that public companies involved in cryptocurrencies are tantamount to corroborating the rationale for the asset class, pushing up its price and indirectly increasing energy usage. She added that cryptocurrency buyers should also take personal responsibility.
The 26th United Nations Climate Change Conference will be held in Glasgow, England, later this year, and the British government has appointed Nigel Topping to coordinate climate targets with businesses until then. The issue of bitcoin energy consumption is unlikely to be on the agenda of the climate change conference, but is starting to appear in broader policy discussions, Topping said.
Topping said the United Nations is looking for ways to prevent the growth of cryptocurrencies from undermining the U.N.’s work on climate change, while supporting the “Crypto Climate Accord” initiative led by the Rocky Mountain Institute in the United States.
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