Tuesday, 27 February 2024

Crypto News

Bitcoin’s water consumption: A new environmental threat?

Bitcoin’s water consumption: A new environmental threat?

Bitcoin, the world’s leading cryptocurrency, has long been under scrutiny for its environmental impact due to the energy-intensive nature of its mining process. 

Since its inception in 2008, Bitcoin has never been hacked. Its tight security, provided by its proof-of-work (PoW) consensus mechanism, provides value to the cryptocurrency.

PoW, however, is energy-intensive and relies on complex cryptographic algorithms requiring vast computational power.

The global popularity of Bitcoin (BTC) has resulted in its network energy consumption sitting at 147.61 terawatt-hours per year as of Dec. 7, close to the yearly average energy consumption of countries such as Poland, Ukraine and Malaysia, according to the University of Cambridge.

Bitcoin’s PoW consensus mechanism has become an immutable security guarantee, but some see it as an environmental nightmare.

While the Bitcoin mining industry increasingly shifts to renewable energy sources to address these concerns, new studies now point toward another ecological problem: the high water consumption of crypto mining.

Bitcoin mining’s growing thirst for water

A recent study titled “Bitcoin’s growing water footprint,” authored by Alex de Vries — a data analyst and researcher at Vrije Universiteit Amsterdam and De Nederlandsche Bank (DNB) — found that Bitcoin’s water consumption has the potential to harm the environment.

The Bitcoin mining industry has grown yearly and continues to reach new all-time high hash rates. This trend is set to continue as the price of BTC surges.

As with any computer, cooling is essential for mining devices to work optimally.

Bitcoin mining rigs have hundreds of machines that reach very high temperatures as they try to solve the complex mathematical challenges PoW presents.

Water is often used for cooling systems and air humidification systems. Additionally, water may be indirectly used to generate electricity.

As the study states, “The water footprint of Bitcoin in 2021 significantly increased by 166% compared with 2020.”

De Vries admits the challenge of quantifying the direct water footprint due to limited public information. However, with the retrieved data combining direct and indirect water consumption, he estimates that the total annual water footprint for United States Bitcoin miners could range from 93 to 120 gigalitres (GL), equivalent to the average annual water consumption of around 300,000 U.S. households.

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