As the worldwide interest in cryptocurrencies continues to grow and an increasing number of individuals and companies see them as an exciting, if highly volatile, investment opportunity, so too does their value and the number of transactions.
Yet whilst many hope to make a quick buck on the back of a largely hysteria-driven market that more often burns buyers than delivering lottery-like returns, the very nature of cryptocurrencies – many of which rely on a clever blockchain technology to verify currency exchanges – has an enormous environmental cost. As digital entities, cryptocurrencies require a vast amount of computing power to make the whole system possible.
Now, calculations carried out by the Dutch central bank (DNB) show just how energy consuming the transactions can be. Looking at Bitcoin – the best-known and possibly most energy-intensive cryptocurrency – researchers found that a single transaction leads to staggering CO2 emissions: equal to the emissions of an average family in three weeks.
According to the DNB, a single Bitcoin transaction in 2020 entailed 402 kg of CO2 emissions – the same as an average Dutch household over three weeks. Even more alarmingly, this carbon footprint is rising because of the increasing number of transactions. In 2020, the CO2 emissions of one Bitcoin transaction were one-third higher than in 2019, Belga News Agency reported.
Yet this increase is not simply down to the growing crypto-craze. As the value increases, so too does the “mining” of Bitcoins – a process by which complex mathematical calculations are carried out on computers as a means of making possible this decentralised form of digital banking.
A helpful explanation of this fascinating but unfortunately highly energy-intensive technology can be viewed here.