Tuesday January 02, 2018
Is bitcoin an environmental hazard?
more stories from this episode
Bitcoin has recently skyrocketed in popularity and value and mining operations are popping up all over the world, including in Canada.
But the huge amount of processing power required to mine the cryptocurrency has some concerned this growing industry will be a disaster for the environment.
'All of this coal-based electricity is going into the bitcoin network and coal electricity has a massive carbon footprint' - Alex de Vries, data consultant
"I would say it's roughly comparative to running a vacuum cleaner in my kitchen 24 hours a day," says Drew Taylor, a Montreal bitcoin miner.
Taylor has two specialized super-computers needed to keep up in bitcoin mining — which is essentially a race to solve the complex math riddles that underpin the bitcoin network, in return for new coins.
"Right about now, [bitcoin is using] almost 37 TWh per year, which is the electricity consumption of a country like Bulgaria," says Alex de Vries, a data consultant and creator of The Bitcoin Energy Consumption Index.
"The real shocker here is that the bitcoin network only processes 350,000 transactions per day. So if you average out the number per transaction ... [that's equivalent] to the power needed for one U.S. household for almost 10 days."
At the current rate, de Vries says a bitcoin uses 70,000 times more energy than Visa per transaction.
- CBC RADIO: The bitcoin power drain
But Leo Weese, president of the Hong Kong Bitcoin Association, says the incentive for miners depends on how many bitcoins are being rewarded for their computing, and every four years that number halves.
"Miners essentially waste a lot of electricity to generate new bitcoins. It's not that dependent on the amount of transactions per day … Currently there are 12 and a half bitcoins being created ... in eight years that's going to be just a little bit more than three ... Even if bitcoin were to double in price every four years it would still not use more electricity than it does today."
And because bitcoin mining is not restricted by access in the same way as bricks-and-mortar banks, many miners are utilizing energy that would otherwise go unused, says Weese.
"[Bitcoin attracts] electricity in faraway locations — which is often hydroelectric power plants that have been built in the middle of nowhere, often to attract industries, but are lying dormant and whose operators are willing to sell that electricity for very cheaply," he tells The Current.
De Vries contends this sole concern for the bottom line has incentivized a return to dirty energy.
"Currently, the majority of these bitcoin miners are located in China and that makes sense because electricity is cheap in China, especially coal-based electricity is cheap in China," says de Vries.
"That's where it gets really painful. All of this coal-based electricity is going into the bitcoin network and coal electricity has a massive carbon footprint."
According to de Vries, given that bitcoin is supported by individual miners, the only way to slow the currency's growth — and the environmental cost in turn — is for the demand to fall.
"The easiest way would be for the current price to crash," he says.
Assessing the environmental risk, de Vries stopped investing in the cryptocurrency in protest.
"I abandoned bitcoin completely."
Listen to the full conversation at the top of this post.
This segment was produced by The Current's Samira Mohyeddin and Susana Ferreira.