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Articles 23rd November 2023

Environmental Effects of Bitcoin

Everything we do throughout the day has an impact on the environment, including how we pay for goods and services. As the world embraces cryptocurrency, such as Bitcoin, it’s important to understand the implications of a large-scale transition to digital currency on our planet. Learn more about the environmental effects of Bitcoin.

What is Bitcoin Mining?

You can mine Bitcoin using a personal mining computer, or rig, mining software, and a mining pool that will join forces with you.

Bitcoin is not the only cryptocurrency that can be mined, but it’s the most popular cryptocurrency. Therefore, it’s the most commonly mined cryptocurrency. Outside of mining cryptocurrency, you can simply buy it at the market value.

Energy Used to Mine Bitcoin

Bitcoin miners set up dedicated mining rigs to mine Bitcoin passively. However, Bitcoin mining uses a lot of energy.

It can be hard to pinpoint exactly how much electricity is used to mine Bitcoin, but experts estimate that 120 and 240 billion kilowatt-hours of energy is used on crypto-assets around the world per year.

While electricity is a relatively clean energy source, it requires fossil fuels, space, and resources to set up the infrastructure for electricity. Large-scale Bitcoin mining operations can have a serious impact on the environment due to their electricity usage.

Energy-Efficient Mining

Bitcoin mining rigs are becoming more efficient, which makes the process more eco-friendly and affordable. Rigs that use less power also tend to have a lower hash rate, so miners need to think carefully about the rig that they purchase. Still, new Bitcoin miners are often surprised at the electricity cost involved in mining Bitcoin. Individual miners may find that the electricity bills aren’t worth the return.

Cost of Electricity to Mine Bitcoin

Electricity is a relatively clean energy source, especially when compared to natural gas. However, electricity costs more. Operating a Bitcoin mining rig at all times requires a significant amount of energy, which will be reflected on your utility bill. The cost varies based on the energy consumption of the rig and local energy costs. The overall value to the miner also depends on the current Bitcoin price AUD, as it fluctuates.

Bitcoin Mining Pollution

On top of energy usage, Bitcoin mining produces pollution. In fact, Bitcoin mining generates 140 ± 30 million metric tons of carbon dioxide per year (Mt CO2/y) internationally, which is similar to the amount of emissions released by railroads each year.

Environmental Impacts of Traditional Currency

Traditional paper and metal currency have even more detrimental effects on the environment than Bitcoin, even if Bitcoin uses the most electricity.

Loggers cut down trees to produce paper money at large factories, contributing to deforestation and pollution. Paper money generally doesn’t last too long, so the process must be processed repeatedly.

It’s also estimated that we use 400 million tons of metal each year to make coins, but at least the coins can last for hundreds of years.

Environmental Benefits of Bitcoin

Bitcoin does offer some environmental benefits compared to traditional currency.

As it’s digital, Bitcoin doesn’t contribute toward deforestation. Bitcoin transactions can also reduce the consumption of resources by keeping most activity online, eliminating the need for driving and paper receipts.

Making Bitcoin More Eco-Friendly

While Bitcoin is currently one of the most eco-friendly currency options available, we can always take steps to improve its efficiency.

Disclaimer: This information is of a general nature only and should not be regarded as specific to any particular situation. This should not be taken as financial advice to buy, trade, or sell cryptocurrency or use any specific exchange. This is not intended for use as investment, financial or legal advice as each individual’s need will vary.
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