Why is bitcoin so carbon-intensive?

Bitcoin is a blockchain-based cryptocurrency that is quickly becoming one of the world's single largest energy consumers. Why, and how, is that happening?

Cryptocurrencies are a relatively new technology. Bitcoin, the first of its kind, was only developed in 2009 based on an idea by a pseudonymous person calling themselves Satoshi Nakamoto. Nakamoto had an idea that would remove governments from the equation in determining the value of currency, a model that would prove extremely popular upon so-called free thinkers.

In the bitcoin model, transactions are managed by users and are listed in a public ledger. Bitcoins would be created periodically, and there would be a limit to the total number in circulation. Due to the laws of supply and demand, this would drive prices - and value - up.

But bitcoin had one fatal design flaw: to obtain a bitcoin, a person must program their computer to solve an algorithm in a competition for the currency. The process of obtaining new bitcoin is called "mining," and the fastest, most powerful computer usually wins out. A common analogy is to a dice roll, where a many-sided die is rolled by the computer until one computer in the competition gets a certain roll. But the most powerful computers can get more rolls of the dice, using more electricity than the rest.

So, as more people engage in bitcoin mining, more people are upgrading their computers (creating incredible amounts of electronic waste) and using more electricity in the process of gathering more currency. Today, it can take about $12,500 worth of electricity to mine a single bitcoin.

That's a problem for climate change. The world still runs on fossil fuels, which emit tremendous amounts of carbon dioxide and other greenhouse gases when producing electricity. These greenhouse gases are contributing to the ongoing climate crisis, which has a variety of disastrous impacts on human civilization. Bitcoin is only worsening the problem. In fact, bitcoin emissions could alone produce enough carbon emissions to raise global temperatures by two degrees Celsius as soon as 2033.

And bitcoin is far more carbon-intense than the rest of the world. In other words, the energy sources used for bitcoin mining emit far more kilograms of carbon dioxide per kilowatt-hour of electricity produced than the world does on average. While bitcoin produces 0.475 kg/kWh of carbon emissions, the world emits only 0.23 kg/kWh. This means that bitcoin's energy use is far worse for climate change than the rest of the world per unit energy.

This discrepancy shouldn't be possible. The dirtiest fuel source, anthracite coal, emits only 0.353 kg/kWh of electricity. And since most estimates of bitcoin's energy consumption approximate that the cryptocurrency runs on at least 40% renewables, there should be no way that bitcoin's energy sources emit 0.475 kg/kWh.

Without more transparent data reporting on the specific energy mix of bitcoin mining, it is impossible to discern how the discrepancy between bitcoin's carbon intensity and that of the rest of the world exists. However, it is clear that bitcoin mining is one of the least efficient and most harmful uses of electricity in existence.

Cryptocurrency mining has disastrous consequences in store for the planet, unless drastic changes are made, soon. Without the essential data reporting, though, those changes appear unlikely to occur. And thus the mystery persists.