An Analysis of Energy Consumption and Carbon Footprints of Cryptocurrencies and Possible Solutions

Abstract

There is an urgent need to control global warming caused by humans to achieve a sustainable future. CO2 levels are rising steadily and while countries worldwide are actively moving toward the sustainability goals proposed during the Paris Agreement in 2015, we are still a long way to go from achieving a sustainable mode of global operation. The increased popularity of cryptocurrencies since the introduction of Bitcoin in 2009 has been accompanied by an increasing trend in greenhouse gas emissions and high electrical energy consumption. Popular energy tracking studies (e.g., Digiconomist and the Cambridge Bitcoin Energy Consumption Index (CBECI)) have estimated energy consumption ranges of 29.96 TWh to 135.12 TWh and 26.41 TWh to 176.98 TWh respectively for Bitcoin as of July 2021, which are equivalent to the energy consumption of countries such as Sweden and Thailand. The latest estimate by Digiconomist on carbon footprints shows a 64.18 MtCO2 emission by Bitcoin as of July 2021, close to the emissions by Greece and Oman. This review compiles estimates made by various studies from 2018 to 2021. We compare with the energy consumption and carbon footprints of these cryptocurrencies with countries around the world, and centralized transaction methods such as Visa. We identify the problems associated with cryptocurrencies, and propose solutions that can help reduce their energy usage and carbon footprints. Finally, we present case studies on cryptocurrency networks namely, Ethereum 2.0 and Pi Network, with a discussion on how they solve some of the challenges we have identified.

Spillover effects of energy transition metals in Chile

“…Notice that the terms critical and transition metals are not interchangeable. consumption ranges of 29.96 TWh to 135.12 TWh for bitcoin as of July 2021 (Kohli et al, 2022). Table 5 suggests bitcoin mining could consume as much energy as Sweden, but putting things into perspective also shows Google and Facebook consuming considerable amounts at 15.4 TWh (Google, 2022) and 7.1 TWh (Facebook, 2020) respectively for 2020.…”

“…On a global perspective, and paradoxically, it is worth highlighting how centralized mining has recently become. China, U.S.A., and Russia, the largest bitcoin mining countries, concentrate around 70% of all the mining, yet also produce most of the renewable energy in the world (see Kohli et al, 2022). In addition, these countries have the largest renewable capacity ratio (RCR), which in turn provides a proportion of the renewable energy available per TWh in bitcoin mining.…”