A quick introduction into Bitcoin

The majority of us are still trying to wrap our heads around the idea of Crypto currency, I first heard about it back in 2016, 7 years after its creation. I greeted the idea of Bitcoin with an instant dismissal, thinking it would phase out and a few unfortunate souls would lose some money. Now in 2021 you can buy life’s necessity’s using this currency. Oh, how fast the digital age moves.

The rise of bitcoins value over the last year has meant the amount of energy used to mine bitcoin has continued to soar as it becomes increasingly popular. According to Cambridge Bitcoin Electricity Consumption Index, the energy used to create the crypto currency’s value is the equivalent to the annual carbon footprint of Argentina.

Putting it simply… What is Mining? 

Bitcoin ‘mining’ is a process in which a computer solves a complex series of algorithms and once it is solved the ‘miners’ receive bitcoin in return; This of course uses electricity. When the currency was created in 2009 it was possible to mine on an average computer within a home. When creating Bitcoin, Satoshi Nakamoto the inventor (Or inventors- no one really knows) of bitcoin insured that the more people mining, the harder it is for the computers to guess the correct answer. So, in order for people to mine with success, they require an obscene amount of electricity to power computers that can harness the extreme processing power needed to get bitcoin, these super computers are known as Mining Rigs.

Environmental impact of mining

Researchers at The University of New Mexico have been investigating the environmental impacts of mining cryptocurrencies. In 2019 a professor in economics said “What is most striking about this research is that it shows that the health and environmental costs of cryptocurrency mining are substantial; larger perhaps than most people realised.” – Benjamin Jones, UNM researcher and asst. professor of economics.

 With new cryptocurrencies popping up all the time so are the efforts to ensure that mining is increasingly being done with electricity from renewable sources. However, because there is no organisation that officially tracks where bitcoin is being mined there is no way of knowing if the electricity being used is fuelled by fossil fuels or renewable energy. What makes this even trickier, mining rigs will be moved around depending on where energy is cheapest. To put into perspective the energy use,  according to Cambridge’s Centre for Alternative Finances the carbon footprint from a single bitcoin transaction is the same as 51,210 hours of watching YouTube.

Elon Musk’s impact

With rising concern about the environmental impact, it seems someone has dropped a truth bomb on Elon musk about the direct impact mining has on the planet. On may 13 Musk tweeted in a statement that Tesla is no longer going to accept bitcoin as payment because of the environmental impact. “We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal,” Musk said.

This sudden change in heart comes a while after Musk was criticised for getting behind cryptocurrency and for investing in it, journalists and the public couldn’t help but raise an eyebrow with this stance which so obviously goes against Tesla’s Ethos.

Musk added: “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,”

Musk’s U turn on Bitcoin caused an immediate 9% drop but prices are rising again. Wherever the rollercoaster of cryptocurrency leads, we know for sure that more needs to be done to ensure renewable energy is more widely accessible to soften the environmental effects from this market frenzy that undoubtably is going to continue to grow.

Leave a Reply

Your email address will not be published. Required fields are marked *