Wednesday 17 August 2022
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Is Bitcoin Good or Bad for the Environment?


Bitcoin and other types of cryptocurrency have been a unique investment option over the last decade or so. However, not everyone is excited about them. For example, New York state is attempting to shut down Bitcoin mining within its borders, claiming it is unsafe for the environment. Is this true? Let’s examine this subject to see what there is to know about it.

The Complaint Against Bitcoin

Bitcoin mining has expanded heavily in New York in recent years, but new legislature looks to block this industry as it develops. A bill presented by Senator Kevin Parker in the state legislature demands a three-year study on the impact of bitcoin on the environment. During this time, they ask that mining be halted and that blockchain – the open-source code used to make Bitcoin and 6,000 other cryptocurrencies – be shut down too.

This law would affect only state operations, meaning many may move out of its borders to continue mining. It asks for studies on the greenhouse gas emissions caused by cryptocurrency mining. It also wants to check for effects on air quality, water safety, and the safety of various wildlife. The state claims this new law brings them in line with the overall Paris Agreement.

Critics of the law scoff at the idea that digital mining of this type causes greenhouse gasses. However, experts state that mining requires an intensive amount of computing power. Some mining centers have dozens of computers, all racing to earn no more than one Bitcoin. And what powers these computers? Electricity is generated by various sources, many of which cause greenhouse gasses.

Why Its Impact is Hard to Gauge

The Cambridge Center for Alternative Finance study gauged just how much electricity was used by Bitcoin every year. They found that it required around 110 Terawatt Hours of power. That consists of about 0.55% of the world’s energy production. That may seem minor but consider that it’s represented by the computing of no more than a few hundred people. Or that it’s an output similar to that of Sweden: the whole country.

The study also points out that a single transaction requires as much energy as the average American household in one month. It’s hard to ignore the high energy use here. However, critics of the bill also point out that their analysis is simplistic and lacks nuance. Simply put, they argue that high energy use doesn’t necessarily mean a high carbon footprint for Bitcoin production.

For instance, the Harvard Business Review states that energy sources often vary and that Bitcoin miners could be using safer and greener options. Unfortunately, knowledge of this information is hard to come by in most areas. Most miners stay very secretive about their methods and rarely release detailed info about things like where they operate and what energy sources they use.

This secretiveness does help to protect miners by minimizing their legal issues. However, it does also potentially shoot them in the foot. Were they to reveal more green electricity sources, they might cut back on their criticism from others, especially when some reports claim that 73% of all Bitcoin’s energy use is carbon neutral.

Stopping this type of mining may be hard for New York to handle. The tech field continues to expand in so many ways. For example, recent statistics find that managed IT services are set to explode and reach levels of around $193 million in upcoming years, meaning the tech industry is simply too lucrative to ignore.

The money handled in Bitcoin, too, is even higher. As nearly two-thirds of the planet will have Internet access by 2023, demand for Bitcoin could be even higher. As a result, containing this mining may run up against fierce political competition. For example, state residents have 120 days to discuss and analyze the new law before it goes into effect, resulting in it being overturned if public outcry is high.