Environmental Impact of Cryptocurrencies: How Bad Is Bitcoin?

Crypto mining electricity-intensive digital activity that burns a considerable amount of electricity, not to mention the energy-consuming transactions.

If you are recycling, choosing reusable or sustainable products, and you’ve already changed your driving habits, it probably means you’re environmentally conscious. However, if you use cryptocurrency, you might want to start questioning your “eco-friendliness,” as more reports are informing crypto-enthusiasts about digital assets’ potential harm to the environment.

Digital assets are created through a high-powered process of mining, where computer systems compete to solve puzzles and create blocks (called mining). It’s an electricity-intensive digital activity that burns a considerable amount of electricity, not to mention the energy-consuming transactions.

According to an article by academics Liana Badea and Mariana Claudia Mungiu-Pupăzan, cryptocurrency production harms the environment in two ways:

  • computer power consumption: computing, networking, and cooling
  • disposal of electronic waste: mining equipment for Bitcoin production becomes worn out in about 1.5 years and thus turns into electronic waste.

On the other hand, since technology advances at a rapid speed, our need to consume more energy to keep the technology running increases too.


According to some sources, Bitcoin uses more renewable energy than any other industry. It’s considered clean and doesn’t produce greenhouse gas emissions. In some countries like Sweden, there are companies that use heating produced by mining Bitcoin to heat greenhouses (known as genesis mining).

“Bitcoin is a digital asset, minted from energy. It is stored digital energy. That is why it has value. Bitcoin’s electricity consumption is not a fault – it’s a feature,”

writes Dominic Frisby in Money Week.

Cryptocurrency Compared to Other Industries

DailyCoin had an exclusive interview with Fred Thiel, CEO of Marathon Digital Holdings, one of the largest Bitcoin mining operations in North America that is functioning at comparatively low energy costs. By the end of 2022, Marathon Digital Holdings plans to be 100% carbon neutral.


During another interview, DailyCoin discussed environmental issues caused by cryptocurrency with Alex de Vries, founder of Digiconomist, a platform that analyzes the environmental impact of cryptocurrencies.

In the report “Bitcoin Net Zero,” Ross Stevens and Nic Carter made a chart that compares the energy consumption of Bitcoin mining with other industries. According to the report, in 2020, aviation transportation consumed 4,030 TWh, over 70 times more energy than Bitcoin. Air conditioning and electric fans consumed 2,000 TWh compared to Bitcoin at 62 TWh.

“Today we are at 49 TWh on an annualized basis. So we’ve actually seen a decline in energy use in the past year. Part of that is because of the crypto mining prohibition in China. There, energy production for Bitcoin was predominantly coal-based, and if this was shut off and replaced with mostly renewable energy like in North America, then you would see the carbon footprint drop dramatically,”

Thiel told DailyCoin.

Carbon emissions of Bitcoin (33 MtCO2) in 2020 also ranked low on the chart compared to major mined products: aluminum’s carbon emissions amounted to 1,084 MtCO2, gold’s amounted to 101 MtCO2, and zinc’s amounted to 47 MtCO2.

However, there’s an opposing view of how the consumed energy by Bitcoin actually compares to other pollutants:

“Bitcoin is responsible for around 0.25% of global CO2 emissions, which obviously means many other industries are still bigger (e.g. fashion is responsible for around 10%). But of course there's a relative element too. Everyone wears clothes; Bitcoin can handle 7 transactions per second (at most) so people couldn't really use it if they wanted to. A single Bitcoin transaction has about the same footprint as 80 T-shirts. In that sense there's nothing less energy-efficient than Bitcoin,”

de Vries explained.

Is Bitcoin Moving Towards Being Environmentally Friendly?

As Thiel said, Bitcoin miners are always looking for the lowest cost of electricity. If you look at the US in the context of renewable energy, there are times of the day when there’s too much electricity made. Electricity has to be used when it’s made because the only way to store it is in batteries, but there aren’t any batteries that are big enough to store the electricity of a nuclear power plant or a solar or wind energy producer.

When there’s excess electricity during the day that can’t be purchased by somebody, it’s given away for free. There’s a time of day when Bitcoin mining uses this electricity that otherwise would be wasted; those generators are renewable power plants (such as wind and solar energy).

“One of the things that Marathon Digital Holdings is doing, we’re working very closely with power providers in the US who generate renewable energy to develop a business model with them, where we could absorb the excess energy that they produce. So when there’s a surplus of energy, we take it, turn it into Bitcoin, and the providers can earn extra money from the energy to build even more renewable energy. 

Bitcoin mining gives a reason for renewable energy providers to put in place more renewable energy generating resources,”

the CEO of Marathon Digital Holdings told DailyCoin.

Independent researcher Alex de Vries argued whether cryptocurrency is worth the energy it consumes:

“I don't think we can ever accept a system that needs to waste energy by design to function (not while we are facing a climate emergency) - even more so given the scalability issues these systems are still facing - but I also think this is a fixable aspect. Many cryptocurrencies are already running environmentally friendly alternatives - so that makes it much easier to deliver a lot more value for the energy spent.”

Solutions to Minimize Cryptocurrency’s Environmental Impact

De Vries said that the single best way to tackle the environmental impact is by replacing the proof-of-work algorithm, which is what’s driving the high energy consumption numbers we find in Bitcoin and Ethereum. Ethereum is already planning to move to proof-of-stake, which would eliminate the need to run specialized energy-hungry equipment. If successful, it would reduce energy consumption by 99.95%, keeping other functionalities unchanged.

However, according to Thiel, that also means that Ethereum is moving towards a model that is much more centralized. That would mean there’s a central authority who can change the value of what’s in your Ethereum wallet, just by simply deciding to do that. So it’s a very simplified difference between proof-of-stake and proof-of-work, but it comes down to security. If you’re going to use digital currency for settling transactions, you want to make sure that the currency can’t be manipulated by the government.

On The Flipside

  • There’s a lot of controversy around the energy consumption used for cryptocurrency.
  • Crypto mining needs to be energy-intensive to provide network security.

Why You Should Care?

As a cryptocurrency user, you should be familiar with the global impact of digital assets. Innovation often means being environmentally friendly, and luckily, cryptocurrency is gradually moving towards sustainability.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.