Mining, the process of creating new BTC, involves solving complex mathematical problems. So to incentivize the miners, the system rewards them with a certain amount of BTC for each problem they solve.
The catch is that this process uses a lot of energy, emitting significant quantities of greenhouse gases (GHG). According to a BanklessTimes analysis, emissions from BTC mining will push global warming above 2°C by 2040.
“Per a digiconomist estimate, a single BTC transaction has a carbon footprint of about 841 kgCO2,” says BanklessTimes CEO Jonathan Merry. He adds, “And as Bitcoin becomes more popular, that number is only likely to increase. Bitcoin could eventually have a significant impact on global warming, as the demand for energy-intensive Bitcoin mining grows.”
Is Bitcoin as dirty as its critics paint it?
BTC critics say that it uses too much energy from sources like coal-fired power plants. Consequently, they argue that BTC is contributing to climate change. However, there are also suggestions that BTC may not be as dirty as its critics paint it.
Proponents say that BTC is cleaner than traditional fiat currency. They hold that renewable energy sources like hydroelectricity power most BTC mines. A recent report has also found that renewables power 57 % of all BTC mines.
What’s more, some experts believe that BTC could help to drive further investment in renewable energy infrastructure. For example, if more people start using BTC, there will be more demand for renewable-powered mines. This could lead to increased investment in solar and wind farms, helping to accelerate the transition away from fossil fuels.
Traditional currencies have a higher footprint
It’s also worth noting that traditional fiat currencies have their environmental impacts. For example, producing paper money requires significant amounts of water and energy. And when you factor in transportation and other costs associated with physical currency, the environmental impacts become even greater.
In comparison, BTC is entirely digital and doesn’t require any physical resources for its production or use, making it much more environmentally friendly.