Over the years, Bitcoin mining has been widely regarded as a resource-intensive industry with a negative impact on the environment. According to the Cambridge Centre for Alternative Finance (CCAF), Bitcoin mining consumes 141.8 TWh of electricity annually, equivalent to the energy usage of Ukraine, and it generates 71.8 Mt of carbon emissions, nearly matching the total annual emissions of New Zealand. But does this prove that it is harmful to the environment?
Since the advent of the industrial age, countries around the world have created enormous material wealth and accelerated the depletion of natural resources. In the age of the internet, activities as routine as sending emails, using social media, or shopping online expand our carbon footprint. Moreover, traditional industries such as metallurgy, steel production, and gold mining generate far more carbon emissions than Bitcoin mining. In fact, Bitcoin is not the primary culprit behind carbon emissions on the planet, and it shouldn’t be made the scapegoat for environmental degradation.
Bitcoin and gold are often taken for comparison since the two assets share similar attributes as stores of value. That being said, which of the two is more environmentally damaging?
Gold mining has a long history, dating back thousands of years. Today, it has become a global business conducted on all continents except Antarctica. Most gold is buried deep underground, which is why finding them requires the use of industrial explosives. Moreover, the industry burns massive fossil fuels to power mining equipment and refining facilities. All of these operations are energy-intensive and release a huge amount of carbon dioxide. According to the CCAF, gold mining produces approximately 100.4 Mt of carbon emissions each year.
In contrast, Bitcoin mining, although energy-intensive, operates around the clock with a multitude of mining machines distributed globally. Despite that, data shows Bitcoin mining generates 71.8 Mt of carbon emissions annually, which is only 70% of the emissions from gold mining.
Aside from heavy energy consumption, gold mining inflicts severe ecological damage on the natural environment. Depending on their occurrence state, gold deposits come in two primary forms: placer gold and hard rock gold, and mining both types of gold will disrupt and pollute the environment.
Placer gold is typically found in alluvial fans, river valleys, and their terraces. Large-scale gold panning activities and the use of heavy equipment can lead to extensive damage to local vegetation and riverbed structures, leading to environmental issues like erosion, landslides, and mudflows. The mining of hard rock gold not only damages landforms and vegetation but also raises concerns about the pollution of heavy metals like mercury, arsenic, lead, and zinc in tailings.
The pollution from the refining process is particularly alarming. Primitive gold refining contributes about 20% of global gold production but consumes over 1,600 tons of mercury each year. A significant portion of this mercury is directly released into the atmosphere, making primitive gold refining the largest source of atmospheric mercury pollution worldwide.
In comparison, Bitcoin mining comes with a significantly lower environmental footprint, as it doesn’t involve the use of explosives or refining processes. Instead, Bitcoin miners rely on the hashing power of their computers, making energy the main cost. Moreover, the energy sources for Bitcoin mining are diverse. Some large mining facilities use renewable sources like solar and wind energy to reduce their reliance on traditional energy sources. This transition helps mitigate carbon emissions and environmental pollution.
To transport gold, a precious metal, we must take account of its weight and volume and adopt the relevant security measures. It is evident that shipping large amounts of gold requires massive energy and huge costs. Furthermore, shipping gold also involves complex security and logistics procedures and expenses.
Compared to goal, Bitcoin offers a clear advantage in terms of transportation. As a cryptocurrency, Bitcoin can be transferred globally instantly across the network. Users can transfer $10 or $1 billion worth of Bitcoin in a very short period of time, and the costs are almost negligible compared to transporting gold.
Bitcoin’s Growing Environmental Friendliness
A report from the Bitcoin Mining Council suggests that 63.1% of the electricity used by its members and survey respondents currently comes from sustainable energy sources. This contributes to a slight improvement in the global Bitcoin mining industry’s sustainable electricity mix to 59.9%, making it one of the most sustainable industries worldwide.
From a self-interest perspective, miners seek available and affordable energy sources to maximize profits. In light of their abundance and widespread availability, sustainable energy sources are an ideal choice for miners.
Marathon Digital, the largest Bitcoin mining operator in North America, is expanding its operations in Paraguay using renewable energy. Argentine presidential candidate Sergio Massa has proposed to mine Bitcoin with natural gas from Vaca Muerta. Bitfarms, a Bitcoin mining company, is building a new 50 MW farm running on hydropower in Paso Pe, Paraguay, and it expects the new facility to be fully commissioned in Q1 2024.
Today, an increasing number of mining organizations, and even some smaller countries, are actively seeking clean energy solutions to promote sustainability. In the long run, this trend will gradually reduce Bitcoin mining’s dependence on fossil fuels and drive the shift toward renewable energy, potentially achieving zero emissions. When that day arrives, the voices of criticism will naturally disappear.
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