Over the course of one single year, bitcoin mining has used twice as much electricity as the State of Qatar.
A sovereign state with a population of over 2.5 million people uses half the electricity that bitcoin mining operations do over any given 12 month period.
Let that sink in for a second.
An unregulated industry
Now, think about the current rules and regulations that we see governing the emission of greenhouse gasses and other factors that prove destructive to our planet.
At this time, the crypto industry is largely unregulated, and that includes the bitcoin mining aspect of the industry, which is astounding when you consider its massive reliance on energy and the associated environmental issues.
Jon Truby, director of the Center for Law & Development at Qatar University’s College of Law, believes that “We could be at serious risk of missing the Paris Agreement targets, and of causing ourselves immense climate change problems.”
Truby was part of an in-depth study that investigated the potential financial and legal options available to policymakers to try and combat the increasingly growing energy dependence of bitcoin mining.
Digiconomist, a provider of crypto information and analysis, believes that one bitcoin transaction uses around 1,000 kilowatt-hours of power, which is the equivalent of that used by four Egyptian family households in one month, or the same amount of energy required to perform somewhere in the region of 100,000 VISA transactions.
With anywhere up to 200,000 bitcoin transactions carried out on any given day, Digiconomist has estimated that bitcoin mining has consumed 73 terawatt-hours of electrical energy over the past 12 months, which is double the requirements of the State of Qatar, and is equal to the yearly usage of Chile, a South American nation of over 17.5 million people.
Another factor worth bearing in mind is that a considerable chunk of this energy usage through bitcoin mining is coal-based, especially in China, which is where 60 percent of all bitcoin mining takes place.
This could mean that the bitcoin network could cause issues when it comes to the international communities aims of decelerating global warming and enforcing the Paris Agreement.
Jon Truby wrote in the study, which was published in Energy Research & Social Sciences, that “although hydroelectricity is partially used to power Bitcoin transactions, Chinese [Bitcoin] miners are still overwhelmingly reliant upon coal, gas, and oil.”
“This is a billion-dollar industry that’s causing a lot of pollution. Why are we not doing anything about it?” Truby asks.
Regulatory options for bitcoin mining
In response to this question, Truby provides within the study a number of regulatory and financial options that could help us veer towards a more sustainable digital currency industry.
This is a real challenge due to the decentralized and peer-to-peer nature of the industry.
Bitcoin mining utilizes an energy-intensive method known as ‘proof of work’ to verify transactions between users, a system which relies on mining hardware that functions 24 hours per day, seven days per week.
It really is a double-edged sword, as on one hand more bitcoin mining and more miners is a signal of higher security levels for the bitcoin network, as bitcoin miners are tasked with approving transactions, but on the other hand, it also means higher levels of energy being used to carry out the bitcoin mining.
The question of potential alternatives has been a discussion point within the community for a long time now, and it’s something that Jon Truby has an opinion on.
“Alternatives exist,” says Truby, in reference to the ‘proof of stake’ system, which sees bitcoin mining carried out by people depending on how many bitcoins the miner holds. At present only Peercoin uses such a system, while there are rumblings that Ethereum is toying with the idea of switching to proof-of-stake in the future.
Another of Truby’s suggestions is the introduction of registration fees collected by brokers from crypto buyers, as well as imposing what would be known as a “green tax” on bitcoin mining devices and purchases.
The rate of tax would be determined by the method of bitcoin mining, with a higher rate for mining-powered by dirty fuels such as coal, and a lower rate for more environmentally friendly practices.
Truby and others believe that this step would give those within the bitcoin mining industry cause for thought when it comes to the way their operations are powered and would see a gradual moving away from the often cheaper, but more environmentally destructive dirty fuels.
In turn, we’d see manufacturers of bitcoin mining equipment look to produce more ‘green’ equipment, and digital currency developers being influenced to adopt low-emission protocols wherever possible.
“I want to encourage developers to think about the environmental impacts when they develop new technologies,” says Truby.
Of course, Jon Truby is absolutely right in what he says. The methods used for bitcoin mining, as well as mining other cryptocurrencies simply is not sustainable, and at some point, something has to give.
It’s probably better for the community itself to look at ways to regulate and try to steer the bitcoin mining operations in the right direction before we see regulation and standards imposed by governing bodies who may not approach the situation in a way that will benefit all parties.
Lover of all things crypto, blockchain and AI, professional tech scribe & part of the editorial team at Crypto Disrupt.