Bitcoin Mining

How Bad is Bitcoin for Environment? The Impact of Bitcoin Mining

While everyone was busy conforming to the societal norms laid out since the 19th century, there was one person (or a group) called Satoshi Nakamoto, who decided to change how it all worked. About a decade later, we don’t need a proof of the fact that whatever he/they set out to do, is well on track. However, there are certain concerns around bitcoin and it’s environmental impact of mining. So, in today’s post, we try to understand why is there a problem at all and how Bitcoin ended on the wrong side of environmental activists. Also, we’d try to discuss how big is this impact and what is being done to fix this.

The Bitcoin Mining:

We have talked about this process at length in one of our previous blogposts. You can read that post here. For the uninitiated, here’s a quick context. You see, when you spend a currency note once, it’s gone. Right? You can’t spend it again at multiple points. Same should be case when you digitize money. But unfortunately, when you do so, people can copy paste it and create multiple copies of money, defeating the purpose.

So Satoshi Nakamoto came up with a way of doing it through blockchain technology. This way you could transact and create a block each time and share it’s copy with everyone. However, if putting up a block on the blockchain was made so easy, people might try to change the chain data in an attempt to dupe the system.

So, for creating the block, concept of proof of work was introduced. Think of it as a complicated mathematical puzzle that needs to be guessed before mining the next block.

That’s where the problem begins. This mathematical puzzle needs computational power which in turn requires electricity. Why do these miners spending resources? Well, they get BTC in return.

A Bitcoin Mining Field: Think of all these stacks as individual computers

Every time a block needs to be added to the blockchain, each of these miners enter a race to solve this mathematical puzzle first. Since only one is going to win this race, everyone else who took part simply wasted electricity in the process. May be sad, but that’s how it works.

The Quantum of Problem:

We’ll talk about the problem in a way that is closest to the home. The normal pencil cell that we use to power our TV remote generates 0.026Kwh power. Now put such batteries in a 20-foot shipping container, you would get the electricity that is required by average American household.

Get a ship that holds 24,000 such containers and you would get enough energy to power a two month supply for every commercial building in US.

For one year of Bitcoin Mining? You would need 385 such ships. That is quite a lot. The energy consumed by BTC in an year is 84,594,077,568 kWh. (Data Courtesy: Quartz)

Why isn’t this a big deal?

Although a massive amount of energy is being spent to maintain Bitcoin blockchain, but rather than focusing on the quantum of energy, let’s understand the sources from which this energy is being derived. As per a research done by Cambridge:

62% of global miners rely on hydropower for at least some of their electricity; 38% use some coal, and about 39% use at least some combination of solar, wind, or geothermal. Altogether, annual global emissions from the network are equal to London Metro Area, according to a March article in the journal Joule. But it’s important to note that these numbers are all informed guesses, based on a lot of assumptions, and liable to fluctuate seasonally and with the price of bitcoin. 

Now try comparing that with the likes of State Bank of India. The great bank has 24,000+ branches in India alone. These branches also require boat loads of electricity to power all the PCs, ACs and what not. Apart from that, energy sources are rather questionable when it comes to running SBI.

Now you take a call. Is BTC going overboard with electricity consumption? OR is it just the cost of running a network?

What’s Next?

No matter what side of narrative you pick, it’s always better to reduce one’s carbon footprint. And if you are something that is all set to takeover the future way of living, you better do that on early stages itself right? So, there are two ways in which people are trying to tackle this situation:

A. Energy Sources:

This must have crossed your mind as well. Why not convert 100% sources of energy consumption to renewable right? Let miners only use the energy being produced by the likes of geothermal and hydro power plants. While you are correct in principal and everything is being done to do so, it is likely to take some time. Given the Chinese bans on miners, they will have to relocate to other countries where electricity is cheaper. And while they do so, I doubt that clean energy will be the topmost selection criteria.

B. Consensus Mechanism:

Remember we talked about how all the computers take part in the race to solve the mathematical puzzle? What if rather than asking everyone to guess the answer, we only ask one PC to do so. That way, we’d save a lot of electricity right?

This method of reaching consensus is called Proof of Stake. In a proof of stake method, every node (or PC) stakes an amount in the network. Then basis multiple logics like (a) Amount staked (b) Time since amount has been staked (c) Past history (d) Randomization, a single PC is picked to mine the next block. This way, everyone has a fair chance of mining and electricity consumption is also under control.

But not everything’s as rosy as it looks. PoW or proof of work has a history of standing tall against all the attempted hacks. It has been the most proven and tested method of consensus when it comes to blockchains.

On the other hand PoS is relatively new and still has a lot to prove it’s mettle.

Also, did I mention that BTC is never going to adopt PoS. Other blockchains like Ethereum are working on it and are likely to move from PoW to PoS by 2022.


While the dreams of achieving carbon neutrality in Bitcoin mining might be far away, but let’s agree on the fact that this is technology and it just like every other technology, it has some cost to run. Rather than bashing it and creating FUD, it’s better that we compare us with it’s peers and then come to a conclusion.

What are your views on this?

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Until next time..

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A techno manager by profession and a hardcore geek at heart. I love to poke my nose into tasks where other usually gave up on. My hobbies include, reading about Blockchain, Cryptocurrency and latest trends in tech industry, playing guitar and yes, memes!

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