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Environmental Impacts of Bitcoin and other Proof of Work (PoW) Mining Activities

As of 2023, 106 million people worldwide had bitcoins but the currency’s influence on the environment is disproportionate.

The primary method of cryptomining, known as Proof of Work (PoW), is mostly to blame for the environmental effects of cryptocurrency mining, and Bitcoin (BTC) mining in particular. Because miners utilise sophisticated algorithms as well as resource-hungry gear and software to validate transactions, the process demands a tremendous amount of processing power.


Miners compete to solve an encrypted problem within each block in order to solve the PoW method of bitcoin. Using specialised software, the miners estimate their way to the solution by using trial and error to solve the mathematical riddle. In essence, bitcoin miners are compensated for performing the validation work that keeps the entire system functional by receiving a set amount of bitcoin in exchange for answering these riddles.

Because they can make more attempts in a shorter amount of time and are therefore more likely to solve the puzzle and receive bitcoin as payment, miners with the most powerful computers are rewarded under the PoW framework.

The global competition for Bitcoin mining, which has resulted in a sharp rise in BTC prices over the past few years, is making the cryptocurrency market one of the most polluting industries in the world. However, there is a dearth of information regarding the environmental impact of Bitcoin mining.

What environmental effects do cryptomining and bitcoin mining have?

Sustainability groups have criticised the cryptomining process, citing the technology’s high energy consumption, greenhouse gas emissions, and hardware requirements. Along their production supply chain and during disposal, cryptocurrencies also produce emissions and have other environmental effects that result in e-waste when they reach the end of their useful life.

When comparing the energy requirements of bitcoin to other activities, the Cambridge Bitcoin Electricity Consumption Index (CBECI) reveals that bitcoin uses more energy than even gold mining.

Although there are other cryptocurrencies that can be mined, Bitcoin is one of the most well known and thus preferred by most users. The more energy-efficient Proof of Stake (PoS) mechanism replaced the PoW technique on the Ethereum blockchain network in September 2022. The change, dubbed the Merge, reduced energy needs by over 99%.

In contrast to mining gold, which necessitates prior knowledge and access to a resource, mining cryptocurrencies only requires a fair initial investment and dependable internet and electrical connectivity. People can mine cryptocurrencies even using a household electrical network thanks to the minimal entry barriers. 

The production and transmission of electricity for the purpose of mining cryptocurrencies has a many environmental effects, regardless of the energy source. The expanding market for digital currencies has a considerably larger environmental impact than certain traditional digital transaction techniques, making it a potentially harmful industry.

National and international policies must be implemented in order to improve the transparency of cryptocurrency mining. Reducing the environmental effects of this worldwide network requires switching to PoS energy-efficient altcoins and technology advancements that lessen the life-cycle affects of all participating components of the crypto network.

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