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Is Bitcoin Mining Detrimental to the Environment? What Are the Solutions?

Is Bitcoin Mining Detrimental To The Environment? What Are The Solutions?

The Bitcoin mining hash rate hit a new all-time high this past month of 80 EH/s, which is equivalent to 80,000,000 TH/s. This hash rate represents an ensemble of mining rigs spread all over the world that are performing hashing operations 24/7, in order to secure and sustain the Bitcoin network and to earn profits via block rewards. Bitcoin mining is highly competitive, and as long as Bitcoin’s price continues to rise long term, then Bitcoin’s hash rate will only increase from here.

China has recently proposed to eliminate Bitcoin mining, saying it uses an incredible amount of electricity and is wasteful. This would have a major impact on the distribution of Bitcoin mining in the world since most Bitcoin miners are located in China. That being said, China has not banned Bitcoin mining yet.

Also, speculation that Bitcoin mining contributes to global warming has led to numerous Twitter posts like the one below.

Study: Bitcoin Mining Could Push Global Warming Over the 2C Threshold https://t.co/F4kch36Qa7 via @WattsUpWithThat

— Marlene Katz (@marlene676) July 25, 2019

The following article investigates whether Bitcoin mining truly is detrimental to the environment, as well as explores the solutions that could mitigate environmental damage.

A Single Mining Rig Can Release 14.8 Metric Tons Of CO2 Per Year

To put Bitcoin mining energy usage into perspective, the Antminer S17 uses 2,385 Watts of power to generate 53 TH/s, which is equivalent to 20,893 Kilowatt Hours (kWh) used per year. This is 100% more than the 10,400 kWh an average American household uses in a year.

A calculator provided by the Environmental Protection Agency (EPA) indicates that the 20,893 kWh used per year by an Antminer S17 requires 34.2 barrels of oils, 1,662 gallons of gas, or 16,152 pounds of coal to be burned, releasing 14.8 metric tons of Carbon Dioxide (CO2) into the atmosphere as well as other pollutants.

The Basic Science Of Anthropogenic Global Warming

Anthropogenic CO2 emissions are the primary cause of global warming. This is because CO2 is a greenhouse gas, meaning that it blocks thermal radiation emitted by the Earth from escaping into space, causing the average temperature of the Earth to increase.

Chart showing CO2 measured at Mauna Loa Observatory courtesy of the Earth System Research Laboratory (ESRL) and the National Oceanographic and Atmospheric Administration (NOAA)

There is no doubt that the amount of CO2 in the atmosphere is increasing significantly long term due to human activities, as shown by measurements of atmospheric CO2 on top of Hawaii’s Mauna Loa Volcano, and this long term rise in CO2 corresponds to a long term rise in Earth’s average temperature.

The question is how much of total global CO2 emissions can be attributed to Bitcoin mining?

Bitcoin Mining Accounts For Roughly 0.1% Of Total Global CO2 Emissions

Assuming that the entire Bitcoin mining network is comprised of Antminer S17s, it would take 1.51 million Antminer S17s to yield the 80 EH/s hash rate of the Bitcoin network. This would consume 31.5 billion kWh of electricity per year, releasing 22.278 million metric tons of CO2 into the atmosphere every year.

According to the United States Geological Survey (USGS), the automotive and industrial sectors of the economy release 24 billion tons, equivalent to roughly 22 billion metric tons, into the atmosphere each year. A more comprehensive estimate is that humans release 40 billion metric tons of CO2 per year. This means that CO2 emissions from Bitcoin mining account for approximately 0.05% to 0.1% of total human emissions.

This calculation makes a couple of critical assumptions. It is assumed that all Bitcoin mining rigs are Antminer S17s when in reality there are many different types of rigs. The Antminer S17 is top of the line, and probably more energy efficient than most mining rigs, so the amount of electricity usage and CO2 emission due to Bitcoin mining is likely underestimated in this example.

A website called Digiconomist attempts to estimate the CO2 emissions of the Bitcoin network by estimating the total amount of money that miners spend on electricity, and this is derived from total Bitcoin mining revenue via a series of assumptions.

Digiconomist estimates that Bitcoin’s energy consumption is between 39.7 billion and 73.1 billion kWh per year, releasing 34.7 million metric tons of CO2 into the atmosphere per year. it also estimates that Bitcoin’s total energy consumption is similar to the nations of Venezuela and Austria.

Based on the data discussed in the article so far, it seems safe to say that Bitcoin mining uses tens of billions kWh of electricity per year, releasing tens of millions of metric tons of CO2, although this is only a tiny fraction of the amount of CO2 emitted by all human activities.

Renewable Energy Decreases The Environmental Impact Of Bitcoin Mining

However, an incorrect assumption that is used for both the Antminer S17 and Digiconomist calculations, is that Bitcoin mining solely relies on fossil fuels for electricity. Solar power, wind power, geothermal power, nuclear power, and hydrothermal power are all clean energy sources that can be used to power Bitcoin mining.

For example, Soluna purchased a 37,000-acre swath of land in Western Sahara, an ideal location for generating electricity via wind power. Soluna hopes to have installed 36 megawatts of power generating capacity by 2020 and to have 900 megawatts installed within the next 5 years. All of this electricity will be used by an on-site cryptocurrency mining farm.

Another example is Northern Bitcoin, which uses the hydrothermal energy of a glacial fjord to power an underground Bitcoin mining farm. Additionally, the coldness of the fjord significantly reduces cooling costs.

In fact, a CoinShares study from June 2019 claims that 74.1% of Bitcoin mining is powered by renewable energy. The study found that Bitcoin mining concentrates near sources of abundant renewable energy, such as hydrothermal power in China and geothermal power in Iceland since electricity costs are lower in such regions.

Proof of Capacity (PoC) And Proof of Stake (PoS) Reduce Energy Usage

Aside from reducing the environmental damage caused by Bitcoin mining via the use of renewable energy, cryptocurrency miners can also choose to mine a different cryptocurrency with a more energy-efficient algorithm.

For example, Proof of Stake (PoS) does not require any mining rigs and barely uses any electricity. This is why the Ethereum Foundation is planning on switching Ethereum to PoS eventually, since that would get rid of the Ethereum mining community, and would reduce the environmental impact of the Ethereum network to basically zero.

The caveat is that PoS generally centralizes power into the most wealthy holders of a cryptocurrency since the amount of cryptocurrency in a wallet determines the amount of voting power. This is less ideal than the highly decentralized Proof of Work (PoW) algorithm that Bitcoin uses.

A better option than PoS is Proof of Capacity (PoC), which uses hard drives to mine cryptocurrency. PoC uses practically no electricity in comparison to PoW, but simultaneously maintains a decentralized network of miners, versus PoS which gets rid of the decentralized network of miners.

The best example of a PoC cryptocurrency is Burstcoin, and another cryptocurrency called Chia is planning on using PoC once it launches.

To be clear, it is highly unlikely that Bitcoin will ever stop using PoW, since PoW is essential for the decentralization of the Bitcoin network. Miners do have the option however of mining a different cryptocurrency that uses far less electricity.

Bitcoin Mining Has A Relatively Small Impact On The Environment, And There Are Solutions To Further Reduce This Impact

In summary, Bitcoin mining releases roughly 0.1% of total man-made CO2, which means it is responsible for a small fraction of anthropogenic global warming. However, it is still important to try and reduce CO2 emissions from Bitcoin mining. Also, when fossil fuels are burned, other toxins besides CO2 are released. One solution is renewable energy, which is widely used by Bitcoin mining farms and drastically lowers the environmental impact of Bitcoin mining. Another solution is to mine cryptocurrencies that have algorithms which are less energy intensive, such as PoS or PoC.

As for the future, it seems likely that the energy consumption of Bitcoin mining will increase long term, but this does not have to translate to increased environmental damage, as long as Bitcoin miners gravitate towards renewable energy sources.

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Paper Claiming Bitcoin Will Cause Catastrophic Global Warming Filled with Inaccuracies

A new paper published in scientific journal Nature titled ‘Bitcoin emissions alone could push global warming above 2 °C’ appears to be filled with inaccuracies that misdirect this dire prediction. 

The Paris Agreement was signed by 176 countries and is designed to mitigate greenhouse gas emissions so anthropogenic global warming does not exceed 2 °C, which some scientists say would be catastrophic. The paper states that drought, wildfires, storms, heatwaves, floods and sea level rise will become more common if the 2 °C threshold is breached. Sea levels will certainly rise in such a scenario due to melting polar ice caps, and heatwaves will become more common since the planet will become warmer.

As for the other catastrophes like drought, floods, and storms, they will shift locations as the climate changes due to changes in large-scale atmospheric circulation patterns, but not necessarily increase on average. Places that are not used to floods might start getting floods, while places plagued with floods might be relieved of their flooding problems, for example.

From 1860 to 2014. 584.4 gigatons of carbon dioxide (GtC) was released by human activity, mostly from the burning of fossil fuels. There has been 0.9 °C of global warming during the same period of time. Greenhouse gases like carbon dioxide block longwave infrared radiation from going out to space, reflecting it back to the Earth, which warms the planet. However, it is important to note that not all of the temperature increase can be blamed on greenhouse gas emissions, since changes in solar heating and other non-linear systems in the ocean and atmosphere play essential roles in climate change.

The paper estimates that it will take 231.4 to 744.8 GtC being released to reach the 2 °C anthropogenic global warming threshold, and this range seems to appropriately account for non-linear systems in the ocean and atmosphere, whose effects on the climate are difficult to predict when aggregated.

Digiconomist, a popular site for tracking Bitcoin mining energy consumption, is referenced in the paper. Digiconomist assumes that 60% of mining revenue is spent on operational costs, and with the assumption of USD 0.05 per KWh, and 0.7 kg of CO2 released per KWh, this yields an emission of 33.5 megatons of CO2 (MtCO2) annually.

A study in June 2018 found that the real energy consumption of Bitcoin mining was half of what Digiconomist says. The study calculated the energy consumption based on the spectrum of Bitcoin mining rig hardware, rather than the overly simplistic calculation that Digiconomist utilizes. Further, the study found that Bitcoin mining is fueled primarily by renewable energy like hydroelectric and geothermal power, since electricity rates are much cheaper near major sources of renewable energy. Therefore, greenhouse gas emissions are possibly less than half of those calculated by Digiconomist.

The paper being discussed in this article used their own methods to calculate Bitcoin mining greenhouse gas emissions and somehow came up with 69 MtCO2 per year. This is more than double the Digiconomist estimate.

The paper then uses an average of dishwashers, electricity, and credit cards to estimate how fast Bitcoin will proliferate globally. There are 314.2 billion cashless transactions per year according to the paper, of which Bitcoin represents 0.033%. The paper extrapolates that Bitcoin will represent all of these cashless transactions in less than 100 years.

Doing the math, for Bitcoin to achieve 314.2 billion transactions per year there would have to be 6 million transactions per block. Some totally full blocks that are 1.2 MB have 3,000 transactions. Thus, the block size would have to be 2.4 GB in the future according to this paper’s calculations, assuming 3,000 transactions is equal to 1.2 mb. This would be completely unsustainable for the Bitcoin network, and would not happen. Second layer solutions like Lightning Network, which use practically no electricity, would be implemented before block sizes are increased beyond the current 1.2 MB approximate limit.

The end results of this paper’s calculations show Bitcoin mining cumulatively releasing 500+ GtC by 2040, equivalent to all of humanity’s CO2 emissions since 1860. By 2060, the projection shows 1,000+ GtC being released by Bitcoin mining.

Summing up the inaccuracies in the paper: scalability is mishandled, since second layer solutions like Lightning Network will be used instead of increasing block size to allow more on-chain transactions. A significant fraction of Bitcoin mining is powered by renewable energy, which barely releases greenhouse gases relative to fossil fuels; the paper does not account for renewable energy at all. The estimates of Bitcoin’s energy consumption are double that of Digiconomist, and the latter has been scrutinized for overestimating by about 100%.

 

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