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Tesla & Bitcoin: How much does Bitcoin really impact the environment?

In the last years, many new things have happened, many new ideas have been coming up, and the global problems the human race is facing are demanding those new approaches. The world has been facing humanitarian problems in different places and new challenges that need to be solved globally as they impact everyone equally.

One of those big problems is, of course, the worldwide pandemic that we are facing at the moment. For the first time in history, a single disease impacts each one of the human race. Another challenge that goes even beyond a worldwide pandemic and may even be its origin is climate change.

For many years, it is already known that the human race and its never-ending desire for economic growth have immensely impacted the global climate, resulting in severe problems for the entire humanity shortly as long as nothing is done against it immediately.

The required steps need to be united, though, as one world with every one of us contributing to the solution together. To unite and work more efficiently and faster together, the companies and nations need to be better connected, which requires further technological development. One solution that could contribute a lot to the change is the digitalization of communication, economies, agriculture, and many more parts of our human world to reduce carbon emissions.

In the eyes of many, progressive and innovative projects like the electric cars of Tesla and the upcoming of cryptocurrencies have contributed to a more connected and efficient world with less harm to the planet. Cryptos like Bitcoin have become extremely popular, and many places like Bitcoin Casinos already accept payments in cryptocurrencies. Tesla, which supported Bitcoin publicly and efficiently by offering the new digital currency as a payment method, pulls out of the cryptocurrency.

The alleged reason for this sudden move is that Bitcoin is not sustainable and environmentally friendly. These accusations of Elon Musk have sparked lengthy discussions about the real value of the new cryptocurrencies. But how much does Bitcoin really impact our environment?

Musk and the pullout

To understand the problem, we have to explain the story behind Musk’s sudden pullout briefly and how Bitcoin is created.

Musk said that Tesla had halted purchases of its vehicles with bitcoin due to concerns over the rapidly increasing use of fossil fuels for bitcoin mining. Previously Musk has described the philosophy and vision of his doing to find new solutions to create a more efficient and especially environmentally friendly world. Due to this approach, Tesla won’t sell its 2.5 billion US-Dollar worth of bitcoin and intends to resume transactions with bitcoin once mining transitions to more sustainable energy.

Mining Bitcoin

Cryptocurrencies result from complicated computer engineering, and not many see through the actual technology behind digital currencies. The coins are created by a process that is referred to as “mining.” To mine, computers are connected to the cryptocurrency network to verify transactions. This complicated process involves solving puzzles, which provide security to ensure no one fraudulently edits the global record of all transactions.

As quantity counts, huge numbers of highly energy-intensive computers are built up all over the world. While some people use their own personal computer to mine, others have built up entire warehouses with thousands of highly processing computers working around the clock.

As those computers are more or less constantly working on completing the puzzles, the whole process requires huge amounts of electricity. A new tool developed by the University of Cambridge models the economic lifetime of global Bitcoin miners and tries to estimate the energy used, using an average electricity price per kilowatt-hour.

As Bitcoin and other cryptos have become increasingly popular in the last year because of their value growth, the demand for the coin has grown equally. The research has shown that the mining process of Bitcoin now requires vast amounts of energy which clearly contradicts the cryptos approach of being a futuristic innovation.

And indeed, the numbers are shocking. The computing needed to support Bitcoins underlines network now requires nearly as much energy as the entire country of Argentina. The amount of energy can be described as around 13 Terawatt or 13.000.000.000.000 Watt per year.

Environmental footprint

This could all be less problematic if all the used electricity came from environmentally friendly energy sources. But the more energy is needed, the more expensive is the maintenance of the mining process for miners as the electricity also has its price. For this reason, people went where electricity is the cheapest. The majority of Bitcoin mining takes place in China, where nearly two-thirds of the electricity comes from coal. This energy source is absolutely not on environmentally friendly solutions and plays a key role in climate change.

In Bitcoin, the average transaction has a carbon footprint of around 360 kilograms per transaction. Looking at the environmental impact of other payment methods shows that Visa, for instance, has a carbon footprint of around 500 milligrams per average transaction. This means that the carbon footprint of a Bitcoin transaction is actually 800.000 times bigger than the carbon footprint of a normal transaction.

This has a vast impact on the global environment, but also, the human habitats are suffering from the mining process. As miners always look for the best location for their mining plants, they often end up in the same location, which can have a huge impact on the local infrastructure, as lawmakers worldwide have noticed. For example, in the northwestern area of Georgia, more than 150 crypto firms sprung up in just a few years. Their collective demand on the electrical grid resulted in frequent blackouts in the country’s capital Tbilisi.

Conclusion

It is not easy to conclude this subject as there are many more factors that actually need to be mentioned, such as the global shortage of chips required for all kinds of devices like electric cars, mobile phones, or graphic cards. The miners’ vast demand for chips, computer technology, and electricity may very well impact and everyone whether one is using the cryptocurrencies or not.

Shortages of electronic devices are probably the smallest of the challenges we are facing globally. The appearance of cryptocurrencies is definitely not contributing to the solution until they work only with sustainable methods. If the pullout of Tesla results from remorse or just a PR gag remains open. Though the crypto world is shattered at the moment, and whether or not it was a pure intention, this move of Musk may lead to a change in the industry.