According to a new report on its damaging environmental impact, Bitcoin mining consumes more electricity than most countries.
Mining is the process by which transactions are added to and validated on the blockchain, the public ledger for cryptocurrencies.
Competing miners race to use computers to solve complex mathematical puzzles using extremely powerful hardware – receiving new Bitcoin as a reward for their efforts.
In 2020 to 2021, Bitcoin consumed 173.42 terawatt hours of electricity – enough to rank it 27th among nations, trumping the likes of Pakistan with a population of over 230 million people.
The resulting carbon footprint was the equivalent of burning 84 billion pounds of coal.
To offset this, a study by the United Nations University found 3.9 billion trees would have to be planted, covering an area almost equal to the Netherlands, Switzerland, or Denmark.
Professor Kaveh Madani said: “Technological innovations are often associated with unintended consequences.
“Bitcoin is no exception.”
What powers mining – and which countries lead the way?
The UN team’s research, published in the journal Earth’s Future, found Bitcoin mining relies heavily on fossil fuels.
Coal made up 45% of its supply mix during this period, followed by natural gas on 21%.
Renewables like solar and wind provided a comparably tiny proportion of the electricity mining uses between 2020 and 2021.
But organisations including the Bitcoin Mining Council – which represents 43% of miners around the world – claim this energy-intensive process has become more eco-friendly since.
Its figures suggest 59.9% of the electricity used by its members came from sustainable sources in the first six months of 2023. However, these figures are difficult to verify, and only represent less than half of the overall network.
Inside the wild world of crypto casinos
At the time of the UN study in 2021, China was by far the biggest Bitcoin mining nation – but it has since been overtaken by the US after Beijing launched an aggressive clampdown on the practice.
Combined, the 10 countries that mined the most Bitcoin were responsible for 92% of the climate footprint.
“Our findings should not discourage the use of digital currencies,” Prof Madani added.
“Instead, they should encourage us to invest in regulatory interventions and technological advancements that improve the efficiency of the global financial system without harming the environment.”