It is a well-acknowledged fact that mining of cryptocurrency requires a considerable amount of energy. The problem is going to be acute in the future as we have witnessed the rise in environment protectionism and regulations. Cryptocurrency miners, on the other hand, try to assuage the fears claiming that much of the electricity required for the mining is from the renewable energy resources which limit the mining impact on the environment. This argument may hold some credence for the regulators, but now according to a new report of PwC by Alex de Vries, the renewable energy is not going to solve the problem of sustainability of Bitcoin.
The report pinpoints about specific aspects related to our estimation of total energy consumed during the cryptocurrency mining. It argues that one has to consider all the related and connected aspects of Bitcoin mining such as cryptocurrency ATMs, cryptocurrency exchanges, payment solutions, and wallets. When compared against the traditional banking system, the total energy consumed by the whole cryptocurrency ecosystem is comparatively very large. According to the report, for making one Bitcoin transaction, the total energy required is estimated to be around 491.4 – 765.4 kWh. In comparison, the energy required for a normal bank transaction is somewhere around 0.4 kWh.
The more important issue highlighted by the report is the huge cost related to carbon footprints that the society has to pay in terms of utilizing renewable energy resources like hydroelectric power. Taking the example of mining hub in the world, i.e., Sichuan, China, the research stated that although the province is known for its cheap electricity rate due to excess of hydroelectric power generation, the very basic nature of hydroelectric power is seasonal. We cannot have the same amount of electricity generation all around the year, and that makes the thing difficult for the crypto industry. The power generation in the wet season is almost three times the power generation that happens in the dry season. This means during the dry season; the companies have to look the other way in order to bridge the gap between supply and demand and hence, many power generation companies resort to generating electricity by using coal which is quite polluting in nature. Clearly, coal is not a green source and has a very heavy environmental cost associated with it.
Another important issue identified by the report is the problem related to the generation of e-waste. Given the fact that most of the crypto mining programs are related to the application integrated circuits and with new advancements, there is left a little scope to improve the circuits to fit into the new program. In the absence of an upgrade, all these old circuits become part of the e-waste which is estimated to be around 10,948 metric tons per year.
The report throws light on the harmful aspects related to crypto mining, and de Vries claims that they have now found a more accurate way to have a clear idea about the holistic picture related with crypto mining and its electricity usage. Not only does the report highlight the aspects related to the energy required for crypto mining but somewhere also provides the information about the limitation of hydroelectric power and more importantly, the huge amount of e-waste associated with the mining of cryptocurrency.