Select Page

How Crypto Mining Is Impacting The Environment

by | Jul 28, 2022 | Environment, Trending


Like the mining industry, crypto mining also has serious environmental consequences. Creating bitcoins is an energy-intensive process. Using energy leads to carbon emissions if it doesn’t come from a renewable source. But unlike the mining industry, the crypto industry has enormous potential to change how it operates. Before we go on to study how crypto mining is impacting the environment, let’s first understand what cryptocurrency is.

In the simplest terms, cryptocurrency is digital money. A decentralized digital system verifies and records the transactions made via cryptocurrency. The system records the transactions in cryptography. This is very different from using actual, physical currency because there is no central authority in the cryptocurrency network, such as a federal or government agency, to regulate transactions. This means that with cryptocurrency, people can keep accumulating wealth without restrictions and without fear of confiscation. Bitcoin is one of the most famous and common examples of cryptocurrencies.

The Environmental Impact of Cryptocurrency

To know the impacts cryptocurrencies have on the environment, we must first understand how coins in a cryptocurrency are created. As we mentioned before, there is no central authority that regulates cryptocurrencies. Therefore, the blockchain relies on users to verify transactions. The users also update the blockchain with new blocks of information. These blockchains are very difficult and costly to verify to prevent data manipulation. Therefore, most cryptocurrencies have a mechanism called ‘proof of work’ integrated into their network.

Proof of work provides users with a complicated mathematical problem. If they solve the problem, they validate the transaction. A fixed amount of cryptocurrency goes to the first person that solves the equation, and the cycle continues.

When you ‘mine’ cryptocurrency, you’re really running programs on your computer that are trying to solve the mathematical problem. The greater your computer’s computational power, the greater your chance of updating the blockchain and obtaining cryptocurrency. This incentivizes crypto miners to buy more computational power to beat competitors and win the prize.

An Application Specific Integrated Circuit (ASIC) is a very powerful computer. Computer engineers designed it for the sole purpose of crypto mining. It optimizes computer power to solve the proof-of-work equations. Users can use the ASIC to mine any type of cryptocurrency. However, today many use them mainly to mine Bitcoin since the competition for this type of cryptocurrency is very high.

The more the people mine Bitcoin, the more the competition rises. The more high-power machines on the market, the more difficult it gets to mine Bitcoin. Today, we have more machines than ever, mining and competing with each other.

A study by the University of Cambridge showed that mining Bitcoin uses 132.48 terawatt-hours (TWh) of energy annually. This is well beyond Norway’s energy consumption in 2020, which stood at 123 TWh. 35.4% of all Bitcoin mining takes place in the US. One kWh of energy consumed by bitcoin mining emits 85 pounds of carbon dioxide. That means Bitcoin mining results in 40 billion pounds of carbon dioxide emissions annually in the US alone.

The environmental idiocy of Tesla's bitcoin bet | Financial Times


Additionally, the system halves the amount of Bitcoin awarded for solving the mathematical problem every four years. The last halving occurred in 2020. That year, the system halved the reward from 12.5 coins to 6.25 coins. After every halving episode, the carbon emissions required to mine one coin doubles.

Are All Cryptocurrencies Bad For The Environment?

The proof-of-work mechanism is the dominant validation method. However, not all cryptocurrencies need proof-of-work to create coins. Therefore, not all cryptocurrencies need the same processing power and energy as mining coins by proof-of-work.

Blockchains always need validation. New validation methods have recently emerged that provide relatively the same level of security as proof-of-work.

In the proof-of-stake mechanism, miners use the cryptocurrency they already own to gain access to mining rights. The blockchain system gives them mining rights proportional to the coins they own. They lock their coins (put them on stake) to create a validator node. Validator nodes can verify transactions. When a blockchain requires approval for a new piece of information, it chooses a random validator node. If the user verifies the data, they can add it to the blockchain and get more coins. However, if they add inaccurate information to the block, they lose some of the coins they put at stake.

The proof-of-stake mechanism does not use as much energy as proof-of-work since we aren’t mining for new coins. However, it creates systemic inequities since users with the most coins get the most returns.

The proof-of-burn mechanism is a mix of proof-of-work and proof-of-stake. Under this mechanism, miners burn an amount of cryptocurrency. Burning permanently removes these coins from circulation. By burning their coins, users buy a virtual mining rig that works proportional to the amount of coins burnt. The more coins you burn, the faster you mine. This form of mining cryptocurrency allows you to get coins without using enormous amounts of energy.

The Future of Cryptocurrency And The Environment

Despite incredible advancements in alternate forms of mining, the proof-of-work mechanism isn’t showing any signs of slowing down. In January 2020, Bitcoin’s monthly energy consumption was 6.07 TWh. This rose to 8.92 TWh in January 2021.

If we cannot do away with proof-of-work mining, we need to find sustainable ways to supply electricity for miners’ computers. A majority of mining happens in the US because China banned crypto mining. To achieve sustainability, we need to move mining away from the US and into countries that generate a greater share of their electricity using renewable sources. The cryptocurrency industry has already recognized this, and large sectors are moving away from proof-of-work over environmental concerns.

Additionally, there needs to be more awareness about the other types of cryptocurrency. Because Bitcoin is the most popular form of cryptocurrency, people usually start with that. Unfortunately, Bitcoin has the most environmental impact. With increased awareness, people can learn about other options and choose an environmentally friendly cryptocurrency.

With increased awareness and action from the industry itself, we can change how crypto mining is impacting the environment for the better.



  • The author has done a master's in Environmental science and is currently working as chief Environmental Advisor with New Delhi State Government.

1 Comment

  1. graliontorile

    Hello there I am so thrilled I found your webpage, I really found you by error, while I was searching on Aol for something else, Nonetheless I am here now and would just like to say thanks a lot for a remarkable post and a all round entertaining blog (I also love the theme/design), I don’t have time to look over it all at the moment but I have bookmarked it and also added your RSS feeds, so when I have time I will be back to read more, Please do keep up the fantastic work.


Submit a Comment

Your email address will not be published.