The financial world is pinning great hopes on cryptocurrency. People have taken to cryptocurrency in large numbers. BTC and ETH are two of the most popular crypto-assets.
However, like any good thing, cryptocurrencies too, have their downsides. Mining of cryptocurrencies is energy-intensive. Of late, with environmental concerns occupying center-stage, BTC has attracted a lot of attention. The attention is, unfortunately, negative. BTC being the most popular crypto asset, is also the most mined. Hence, it is also perceived to be most responsible for high energy consumption.
Bitcoin mining- Energy consumption
For example, the genesis crypto asset is very high on energy consumption. It alone accounts for 0.6% of global energy consumption- more than the annual energy consumption of Norway.
BTC mining is also high in carbon dioxide emissions. Co2 emissions from mining currently stand at 60 million tons. It was only 20 million tons in 2019.
This is a huge jump in energy consumption from only a few years ago. Then, the cost of the mining equipment and the energy consumption was negligible. But the value of BTC was also near zero then.
Now, in 2022, the cost of the mining equipment is astronomical, as is also the energy consumption ($12,500). Globally, the cost of mining or trading BTCs costs 91 TW of energy. Also, the constant up-gradation of mining equipment adds substantially to the existing huge e-waste problem.
Owing to the energy problem, China has banned bitcoin mining. So too has Iran. The EU, too, is considering a similar step.
To counter this problem, miners are considering using greener energy sources such as solar power. Countries such as Paraguay are only using hydroelectric power.
Clearly, as crypto assets gain popularity, the miners will need to address the energy problem. Else, regulators will move to sanction and even ban the mining and trade of crypto assets to the detriment of the sector.