It’s no secret that cryptocurrency mining requires 24/7 operation of computers that consume massive amounts of electricity, with an equally massive carbon footprint to boot. As any stoppages in operation will compound the difficulty of mining the next coin, cryptocurrency mining by design forces miners to operate more and more computers, preferably powered by the latest and fastest chips. Hardware that has fallen into disuse subsequently becomes massive e-wastes. Experts estimate that each transaction is the equivalent of discarding two units of iPhone 12.
Quartz indicates that a research conducted by Cambridge University earlier this year concluded that the global network resources utilized by bitcoin miners consume as much electricity as Argentina every year. The previous edition of the Joule journal showed that bitcoin mining volume had been surging along with bitcoin prices; in terms of greenhouse gas emissions, bitcoin mining is the equivalent of the London metropolitan area.
Not only are these mining systems power hungry, but they also force miners to operate with only the latest and fastest computer chips with the lower power consumption while discarding old ones. cryptocurrency economist Alex de Vries estimates that chips used for bitcoin mining have an average lifetime of about 1.3 years, since chips that are older than this yield practically no profits. This estimation is based on the speed at which new hardware is released to market, as well as the assumption that most miners replace their chips based on said speed.
Judging from current bitcoin prices, e-wastes resultant from bitcoin mining worldwide amount to about 307 million tons per year, which is approximately equal to the volume of electronics, including laptops, smartphones, and other personal electronic devices, discarded in the Netherlands every year. The bitcoin network processed about 112.5 million transactions in 2020, meaning each transaction resulted in the equivalent of 272 grams of e-wastes, or the weight of an iPhone 12 mini. Alex de Vries further believes that bitcoin mining’s ever-growing demand for new hardware is one of the chief reasons for the ongoing semiconductor shortage worldwide.
According to the UN, e-wastes are the fastest growing waste materials in the world, with a 21% increase across the 2014-2019 period to 53.6 million tons. While fewer than 20% of e-wastes are recycled, they contain many metals and chemical compounds that are harmful to humans.
Many people the world over are discussing the possibility of a “green” bitcoin. Some possibilities include positioning bitcoin mining centers in renewable energy hotspots, mining bitcoin at periods with low electricity demand, or leveraging excess electricity from elsewhere to power mining operations. These possibilities have been called killing two birds with one stone, since mining outfits can now receive low-cost electricity with zero carbon emissions, while wind farms and photovoltaic power stations can in turn obtain large clients.
However, if one takes for granted the assumption that electricity should be allocated to purposes that benefit the society at large, then one will arrive at the conclusion that mining operations should be terminated. Experts, however, believes that the termination of cryptocurrency mining is unrealistic, since mining is most effective when operated 24/7. In order to get ahead of competitors, the only method is through finding cheaper sources of electricity and operating more machines, at a greater frequency.
In China, certain mining operations run on hydroelectric power during the summer seasons due to this energy source’s low costs, but these operations transition to coal-fired power in the winter. Bitcoin miners have also been migrating operations to the Pacific Northwest in Canada and the US in pursuit of cheap hydroelectricity. Russia’s state-owned natural gas company Gazprom also has a department that sells electricity generated by gas flare to bitcoin miners. As a byproduct from drilling/refining of petroleum and natural gas, gas flares have the issue of emissions as well.
In a survey of 280 bitcoin companies conducted by Cambridge in 2019, 39% of the surveyed enterprises indicated that their mining activities were powered by renewable energy. As for the issue of e-wastes, the Cambridge research pointed to a need to replace bitcoin mining with more sustainable alternatives, namely, PoS (proof of stake). Ethereum, for instance, announced in May an intention to transition to PoS within the coming months. On the other hand, the efficacy of mining the Chia cryptocurrency depends on storage capacity. Chia mining is therefore accused of disrupting the supply and demand of the HDD/SSD markets.
A professor of applied economics at MIT Sloan believes that bitcoin mining is a terrible system that overly relies on competition over electricity to determine the winners. But he also emphasizes that this is an issue with bitcoin rather than with cryptocurrencies at large.