At Tesla, it is no longer possible to pay with bitcoins for the time being, CEO Elon Musk reported this week on Twitter. The company is concerned about the currency’s large environmental impact. But how bad is the cryptocurrency for the climate?
“Cryptocurrency is a good idea in many ways and we do see a future in it. But it should not be at the expense of the environment,” Musk wrote on Twitter earlier this year. He was referring to the rising energy consumption of bitcoin. According to an estimate from the University of Cambridge that he placed there, about 151 TWh of electricity is needed annually for the bitcoin.
That’s a huge abstract number. To put it in perspective: the electricity consumption of the bitcoin corresponds to that of countries such as Egypt and Poland. According to the university, with 108.8 TWh per year, even less electricity is consumed throughout the Netherlands than is needed for bitcoin. Computer systems puzzle day and night
That electricity is needed to mine or mine bitcoin. Bitcoin works on the basis of the blockchain, a kind of collective log in which all participants together keep track of all transactions. This register is supplemented every ten minutes with a new ‘page’ with the latest changes.
In order to safely process each supplement, a complex mathematical formula must be solved. Worldwide, special computer systems are puzzling, or mining, all day long. Whoever solves the formula is rewarded in bitcoin. A lucrative job, since 1 bitcoin is worth more than 50,000 dollars (more than 41,000 euros) at the time of writing, but it costs a lot of electricity. Gold industry is also not climate-friendly
Proponents of bitcoin say that the amount of electricity that the cryptocurrency needs is not too bad if you look at other things. For example, winning gold is not exactly a climate-friendly job.
The gold industry produces between 2,500 and 3,000 tons of new gold annually and consumes 475 million gigajoules of electricity, according to Don Wyper, the COO of the American crypto platform DigitalMint. That is equivalent to about 132 TWh, just a little less than the bitcoin. Crypto industry wants to become more sustainable
In addition, an industry that consumes electricity does not necessarily have to be bad for the climate. A poll conducted by the University of Cambridge shows that 39 percent of the computer systems that solve the complex mathematical formulas for bitcoin run on renewable energy.
Nevertheless, the Dutch blockchain specialist Alex de Vries estimates the annual emissions of the bitcoin at about 90 million tons of CO2. That is comparable to the emissions of the metropolitan area of London, where more than fourteen million people live.
In the long term, however, this must change, according to the sector itself. The major crypto players signed the Crypto Climate Accord last month, in which they agree to be climate neutral by 2040. And that’s exactly what Musk is hoping for. His company Tesla has not sold the bitcoin it has, and hopes to make transactions with bitcoin possible again in the future, if the coin is more climate-friendly.