There’s a new gold rush happening globally. Instead of miners migrating west and breaking stones, “Bitcoin miners” build extensive computer systems in the race to strike it rich.
Bitcoin is the first successful cryptocurrency, a digital peer-to-peer currency that cuts out third parties like banks. Interest in cryptocurrency has skyrocketed since Bitcoin’s founding in 2008. So has its value. In July 2015, a Bitcoin was worth $280. In April 2021, the value peaked at $64,899.
Participation in the Bitcoin market has increased too. 13% of Americans traded in Bitcoin in the last year versus 24% who did so in stocks. Interestingly, Bitcoin traders are more diverse than their stock investor peers. Women, People Of Color, and poorer Americans accounted for a larger proportion of those trading in cryptocurrency than in stocks.
Yet, despite its potential, Bitcoin has a major problem.
Bitcoin is now a leading energy consumer, with an outsized environmental impact. There are two main ways Bitcoin impacts the environment: energy usage and e-waste. Bitcoin “mining” is when miners use computers to solve intensive computational puzzles to validate the legitimacy of Bitcoin transactions.
The logic driving Bitcoin mining is simple: the better your computer, the more Bitcoin you can potentially mine. As a result, waste is embedded in the structure of Bitcoin.
The race to mine Bitcoin drives consumption of electricity and computers. Bitcoin mining consumes more electricity annually than the nation of Finland, a tenfold increase since 2016. It also has hefty CO2 emissions, producing 22-22.9 million metric tons of emissions annually, about the same as the Dominican Republic.
Even if Bitcoin used only renewable energy, e-waste is still a problem. Every 18 months, the computational power of mining hardware doubles, and Bitcoin miners are quick to replace their fleets to keep up with their peers.
There are other issues to explore, such as whether these resources could instead be used for something better for society?
All of this is to say that Bitcoin is a fundamentally wasteful system. To alleviate the environmental impacts, the foundations of its currency would need to change.
The promise of striking it rich draws many people into Bitcoin, but there is little attention paid to environmental consequences. If this issue is important enough to current and potential investors, they must push for change.
This semester, there are multiple avenues I will explore from rare earth mineral extraction to environmental justice-related consequences (such as the draws for underrepresented groups and what environmental consequences mean to them), to what influence “environmentally friendly” companies promoting cryptocurrencies (i.e. Tesla and Elon Musk) means for public understanding. Also, how can we change Bitcoin – whether that be through legislation or public demand – to limit its damages?