Bitcoin, the Unfriendly Digital Gold

The skyrocketing price of Bitcoin and its status as digital gold has been the main topic discussed throughout 2017. In early 2018, the optimism of the market regarding the digital currency is still continuing although not as strong as the previous month. That optimism kept Bitcoin's price above $ 13,000. At the same time, vigilance about Bitcoin as an investment asset is also voiced by governments, economists and central banks in some countries.

In the midst of this frenzy, Alex de Vries (28 years), a consultant from PwC and founder of the Digiconomist site (a Bitcoin analysis site), calculated the question of the environmental impact of mining activities and Bitcoin transactions as a digital currency. Alex estimates the use of Bitcoin electrical energy by looking at the earnings of Bitcoin miners and then looking at their spending on electricity payments.

Currently, Digiconomist calculations claim Bitcoin's global mining activity spends 36.63 Terawatt-hours (TWh) of electric energy as of December 31, 2017. On the same date, Bitcoin's electricity usage is close to Bulgaria's electricity consumption figure. According to this estimate, every Bitcoin transaction produces 146.97 kg of carbon dioxide.

Read also: Bitcoin: Gold or Agate Digital?

The relation between Bitcoin and bad emissions of carbon dioxide to the environment is formed because of the energy utilization of coal-fired power plants by Bitcoin's mining (Bitcoin through computing power) facility. According to a study by Hilman and Rauch (2017) of the University of Cambridge, 58 percent of Bitcoin's mining facilities are located in China. Countries whose energy consumption is still dominated by cheap coal-fired power plants, but bad for the environment given the large amount of carbon dioxide emissions. Within one hour, 1 kilogram of CO2 can be produced by a coal-fired power plant.

In the same study found that digital currency mining in China consumes the most electrical energy compared to other countries to reach 111 Megawatts. Sichuan Province has even cooperated with hydroelectric power to provide cheap electricity costs.

Not only mining, in terms of Bitcoin transactions are also claimed to be inefficient in energy consumption when compared with other transaction methods such as Visa or Ethereum (other types of digital currencies). Bitcoin is estimated to consume 200 kilowatt-hours of electrical energy per transaction compared to Visa which uses only 0.1 kWh and Ethereum which requires 37 kWh. As context, according to estimation from Teunis Brosens, an economist from ING Think, 200 kWh is the consumption of electrical energy for four weeks in the Netherlands with an average usage of 45 kWh per week.