On Friday 21 June, Facebook announced the launch of its own cryptocurrency. Over the course of the same weekend the price of the best-known cryptocurrency – Bitcoin – soared, rising above $11,000. At around the same time as these headlines were causing a stir, a group of researchers at the Technical University of Munich (TUM) released the most comprehensive analysis of the environmental impact of Bitcoin to date. They concluded that the use of the currency releases around 22 megatons of CO2 emissions annually – comparable to the total emissions of cities such as Hamburg or Las Vegas.
Bitcoin may be a virtual currency but using it is energy intensive. Simply put, for a Bitcoin transfer to take place, a piece of hardware called an ‘application specific integrated circuit’ (ASIC) has to solve a mathematical puzzle. This process is known as Bitcoin mining and can take place on a huge scale in cryptocurrency ‘farms’ where hundreds of ASICs solve riddles at the same time. Crucially, this uses a great deal of computing capacity. The TUM researchers set out to determine exactly how this translates to electricity usage and the resulting impact on carbon emissions.
Christian Stoll, who conducts research at both TUM and MIT, explains that there are two major differences between this new study and previous attempts to quantify carbon emissions from Bitcoin. Firstly, the researchers were able to analyse the efficiency of the actual ASIC devices used to carry out mining, something that could previously only be guessed at. They were helped by the fact that the three Chinese companies which control the ASIC market are all planning to launch on the stock market and have had to put previously secret information into the public domain as a result.
‘To determine the electricity consumption in the network you need to know the efficiency of the mining devices that are out there,’ says Stoll. ‘Using the IPO filings of the three major hardware companies we could calculate a pretty accurate number for the efficiency of the hardware that miners actually use.’ Through this analysis the researchers determined the annual electricity consumption of Bitcoin, as of November 2018, to be about 46TWh, equivalent to that of the entirety of Portugal. As of this issue going to print, if Bitcoin were a country, it would be the 43rd largest consumer of electricity, sitting just above Switzerland.
The second aspect of the study involved determining how much CO2 is emitted as a result of this electricity consumption. ‘We used IP addresses to calculate a geographic footprint of where mining takes place,’ explains Stoll. ‘Depending on the location of where you mine, your electricity is rather clean or rather dirty.’ The team localised 68 per cent of the Bitcoin network computing power in Asian countries, 17 per cent in European countries, and 15 per cent in North America. It then linked this data with statistics on the carbon intensity of power generation in the countries involved to reach the overall figure of around 22 megatons of annual CO2 emissions.
This analysis of Bitcoin carbon emissions is the start of a much wider project. The blockchain technology that powers cryptocurrencies has multiple uses – money transfers, digital voting and medical record keeping are all areas where it might be used in the future. The next step is therefore to track the wider environmental impact of this potentially widespread technology.
This was published in the August 2019 edition of Geographical magazine
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