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Bitcoin: How Do Cryptocurrencies Affect the Environment?

Cryptocurrencies Are in the Eye Of the Hurricane Due To the Ecological Damage That They Cause.

Bitcoin coin superimposed on a photo of the Earth

The production of cryptocurrencies does enormous damage to the environment. Photo: LatinAmerican Post

LatinAmerican Post | Brandon Martínez Salazar

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Leer en español: Bitcoin: How do cryptocurrencies affect the environment?

The world has seen how cryptocurrencies have positioned themselves in the market creating a series of uncertainties, not only due to their volatile behavior on the stock market but also because their production does enormous damage to the environment.

Elon Musk, the founder of Tesla, a few months ago gave the go-ahead to use bitcoin as a means of payment when buying his cars. However, the businessman has reversed that decision as he ensures that cryptocurrencies do not represent an ecological vision, on the contrary, their impact is considerable for our environment.

The studies carried out so far on the subject of bitcoin yield quite critical results that reopen the debate on ecological sustainability since it was discovered that computer mining for the creation of bitcoins generates an exorbitant consumption of electrical energy. In other words, we would be talking about hundreds of millions of tons in greenhouse gas emissions.

According to an investigation by the journal Nature, it was concluded that in China alone 130 million tons of GHG will be produced in 2024 for the creation of these cryptocurrencies, more than those produced by the Czech Republic in its entire economy for a year. Similarly, the University of Cambridge points out that the annual energy needed for their production already exceeds all the energy that Argentina consumes. In other contexts, if Bitcoin were a nation it would consume more electricity than Finland and Switzerland annually.

Also read: Colombia bets on renewable energies

Why does this happen?

The production of bitcoins requires the operation of hundreds of thousands of computers. For its full performance, large energy expenditure is necessary, which translates into a huge expulsion of CO2 into the environment. In this way, the "mining" of cryptocurrency is based on the permanent verification of transactions that are carried out through complex mathematical calculations to ensure that no one fraudulently changes the general records of said transactions.

Returning to the study carried out by the University of Cambridge, it was found that the equivalent of electricity consumption to produce bitcoins today is 121.36 terawatt-hours (TWh) per year, which paradoxically puts it above countries such as:

Argentina (121 TWh)

Netherlands (108.8 TWh)

United Arab Emirates (113.20 TWh)

In the same way, analysts from the Bank of America agree with the aforementioned studies, since an investment of 1,000 million dollars in cryptocurrencies (lower than that made by Elon Musk at the time) would end up generating the same amount of CO2 that 1,2 million gasoline vehicles produce each year.

However, experts emphasize that three-quarters of "mining" is done in China, a country where almost half of its energy is produced with coal. In that sense, the manufacture of paper has a much lower impact compared to cryptocurrencies, which makes conventional money not only more stable but more ecological.