How Environmentally Friendly is Bitcoin?
I am almost sure that the most users in possession of Bitcoins or other cryptographic currencies have never thought about the impact made during mining or any corresponding process. The asset exists virtually, cannot be touched or accessed by any other human sense, but as any other artificial object leaves a trace of its presence in form of a carbon footprint.

The direct or estimated determination of the carbon footprint became a very popular assessment method in nature conservation and environmental studies. Simple processes such as burning fuels or producing waste can be measured and expressed with corresponding units. International obligations and standards make such calculations and further analysis crucial for the economies and budgets of nations.

A similar approach can be adopted with cryptocoins and built on the block chain – the main register of the processes in the online system. However, the discrete nature and privacy of users poses additional complications for potential researchers.

Weakest Link

The Bitcoin mining process can be described as a rapidly-growing branch of the online economy asking for extraordinary amounts of energy to satisfy its primary needs - the initial process of extraction of coins by solving mathematical tasks. 

It is well known that to generate every new block the machine has to solve a more complicated problem than before. To advance on and surpass other competitors, miners invest in equipment for more power, producing bigger hashing rates.

The hashing power of the Bitcoin network has recently out-powered the Top-500 world supercomputers and is adding more to keep up the pace.

Nick Gogerty, the developer of Solarcoin and corresponding trading principles, has named the present conditions as the “Red Queen” problem:

“The Red Queen is originally from Alice in Wonderland. In the Queen’s race everyone runs faster, but you never get ahead. The same happens in hashing. All of the participants are co-adapting. You have to keep adapting to keep up.”

His current works prove the complexity of the problem. The aim to develop a methodology to determine the Bitcoin footprint takes more time and dedication than it was supposed before.

Guy Lane, the founder of sustainability advisory service Sea O2 and developer of defined further aspects of the research:

“Of course, Bitcoin is mined everywhere from data centers, distributed locations, working pools, rigs set up in garages and even on PCs that have been hijacked by bots.”

Apart from the classification of and accounting for equipment, it is important to determine the sources of energy used to drive the machinery. Regions of a single country may have varying supply and demand parameters, as well as electricity production and distribution policies and extant power sources.

Mr. Lane’s preliminary method is based on certain assumptions, many of which may change in the course of the work. He believes that 90% of the cost of a single coin is invested in mining by paying for the required electricity.

Using data acquired from the IEA or International Energy Agency he creates benchmarks. According to his method, 50% of mining is completed in the USA and China. He averages the numbers expressing carbon emissions per kW of mains power, finally obtaining a result of 0.65 tons (1300lbs) of CO2 being produced while 1 MW of electricity is spent on mining Bitcoins.

Further calculations reveal that 6.98 kg (15.38lbs) of CO2 are emitted for every dollar invested in Bitcoin mining. Summing up Mr. Lane determined a number comparable to the emissions of Cyprus.

His opinion is that the values might be lower, but the estimations are currently imprecise to know. Many experts on the contrary consider the values obtained to be too conservative. 

Revelations from Miners

Dave Carlson, founder of Megabigpower, can be found in Washington. He registers the expansion of his database and is able to provide first hand data for analysis.

As 10 TH/sec (10,000 GH/sec) produce 1 BTC/day at the current difficulty level, the hardware uses one watt per GH/sec. Finally, it takes 10,000 watts (10kW) to run 10Th of equipment. 

The 10kW machines are working 24/7 or 240kW/h (24% of a MW/h). A full MW produces 0.65 tons or 1300 lb of carbon dioxide. 24% of this number corresponds to 1 BTC mined.

The resulting number can be compared with 15.9 gallons of gasoline without ethanol burned. Still, Mr. Carlson remarked:

“We are 100% hydroelectric. I am also looking at re-investment in wind power generation (mostly as a hedge against power prices rising). We are very aware of our carbon footprint and the likelihood that it will increase.”

Swedish equipment manufacturer KnCMiner also uses advanced and eco-friendly energy sources. Sam Cole, the co-founder, commented:

“What I can say real quick is that our data center is run on hydropower. So we are about as green as they get.”

Observing the various approaches anyone can draw a very simple and obvious conclusion - mining as any other process performed by humans can be both environmentally friendly or damaging; everything depends on the principles behind. The responsible attitude, choice of green energy, optimization, and introduction of energy efficiency can contribute to the minimising the impact of the Bitcoin economy on global environmental conditions. 

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