Living in the 21st century, it is almost guaranteed that you have heard of the word “Bitcoin” at least once in your life. You may even know what Bitcoin is, or have a general understanding of how it works. Bitcoin is a type of cryptocurrency, which is currency that is completely virtual and decentralized. This means that a bank or government does not have control over the currency. Instead, the control is distributed throughout many computers all over the world. You may ask, how is it possible for the currency to be controlled by these computers?

To verify the legitimacy of Bitcoin, every single transaction with the cryptocurrency is made public. With these transactions made public, nobody is able to cheat the system and make copies of their own Bitcoin. However, because so many transactions are made, processing these transactions is made available to anyone with a computer powerful enough. To process these transactions, the computers have to figure out increasingly complex puzzles. Whoever contributes to processing these transactions are sometimes rewarded Bitcoins of their own, which gives incentive to people with powerful computers to process Bitcoin transactions for Bitcoin users.

This action is called “Bitcoin mining.” Bitcoin miners use their powerful computers to process these transactions to “mine” Bitcoins of their own. This is when the environment comes in. Because so many users around the world are using powerful computers to mine Bitcoin, they end up using massive amounts of energy, which indirectly leads to supporting the burning of fossil fuels and its negative impact on the environment. In fact, Bitcoin mining is so prominent and energy consuming that it uses more energy per year than the entire country of the Netherlands.

After Bitcoin’s impact on the environment was made apparent, many people, entrepreneur Elon Musk being one of them, have stepped away from the cryptocurrency. Other cryptocurrencies such as Dash using different transaction verification methods not requiring so much computing power have also been created in response. However, recent data suggests that after China, one of the areas with the most Bitcoin miners, put an end to Bitcoin mining, the overall energy used to mine Bitcoins has almost halved. In the future, if renewable energy becomes more prominent, Bitcoin mining may be able to continue without having such a big impact on the environment.

Sources:

1. https://www.investopedia.com/tech/how-does-bitcoin-mining-work/

2. https://www.bbc.co.uk/newsround/25622442

3. https://youmatter.world/en/bitcoin-bad-environment-impact/

4. https://www.cnbc.com/2021/07/20/bitcoin-mining-environmental-impact-new-study.html