As we see, the investors are now gearing up to match with the latest financial trend of digital currency like Bitcoin; few are concerned about the carbon footprint involved in its production. Bitcoin values to around 1 trillion USD; thus, the amount of footprint it is leaving behind is enormous. As per reports, the yearly carbon footprint by this digital currency is somewhere close to Mumbai city or Slovakia. Yes, you heard it right. As per the recent study conducted by a Holland-based economist called A D Vries, Bitcoin leaves around 38 MT on an annual basis against Mumbai city, which comes out with 32Mt. It is huge. As per the said economist, the energy consumption index of this digital coin will consume a huge amount of energy in the coming years. Thanks to the higher power consumption of each transaction taking place, which makes this concern valid for many.
Electricity Consumption and Bitcoin Creation
This digital coin is created with the help of a process called mining coins, which happens to be a high-end and complex computer program taking loads of time to carry out those complicated calculations. The more money to be created will demand more time and power consumption. With mining, you get a tangible source of revenue. It is said that people with a hunger for this money will never mind running those high-end power-hungry systems and machines for long to get their piece of cake. Earlier in 2017, it was estimated that every single Bitcoin network usually consumes not less than 30 TH of electricity on an annual basis.
However, as per the current estimate, the network now demands more power and energy consumption to get the same amount of production of Bitcoin. It is estimated to be just twice the power now you need to mine a similar amount of digital coin in a network. It could do anything between 80 to 100 TWh of power, claims the experts. With this, the carbon exit for the money overshadows the carbon exit of Norway. Though roughly speaking, the crypto genius takes around 300 Kgs of CO2 every time it takes place. This goes to an exit of 75K of credit cards transacted in any country and the amount of CO2 involved in it. If you imagine Bitcoin to be any nation, it consumes power or energy more than the countries like Bangladesh or Austria.
Working out the Carbon footprint
One of the key areas of this issue is associated with mining bitcoins, which is not often a huge energy consumption area. The fact of the matter is a majority of mining establishments are found in areas that generally rely on coal-based power. Earlier, finding out the CO2 exit with Bitcoin mining was difficult to monitor as miners are difficult to track. As per an earlier study, the establishment involved in bitcoin mining needs 232 MW of power on an annual basis. This is around 60 percent of the cost of making the digital coin. Earlier this year, in January, a single unit of Bitcoin cost went to around 42K USD, while miners were able to make around 15 Billion UD on a yearly basis, which is huge.
Prevention against the higher consumption
As the implications of the digital money mining world are growing, experts and policymakers feel that there are ways of avoiding this problem in a big way. Examples from Canada are given where the moratorium with their latest mining operations are imposing newer methods to slash down the consumption. One may argue that Bitcoin happens to be a decentralized currency, but a number of its aspects that surround the money are certainly not. Hence when mining is done on a large scale, one can expect higher electricity rates and many more other issues involved with the machines and equipment engaged in it.
There are several nations, including India, which seem to be planning to regulate the mining process or even the usage of the same. With more than 7500K of investors in this domain in India alone, the prices seemed to have surged in the recent past. This is a boom time to digital money; it would be difficult to regulate it. However, there can be ways to reduce the consumption of power and slash down the CO2 exit in the world, which has to be implemented.