The electricity being devoured annually to mine Bitcoin is now eight times more than that being used by technology companies Google and Facebook combined, and even higher than Norway and Switzerland's usage, spurring concerns about the environmental impact of the digital currency.
The world's first and biggest cryptocurrency eats up 143 terawatt-hours of power annually, more than the usage of many medium-sized European nations, according to data provider TradingPlatforms. For perspective, global data centres consume 205TWh yearly; Bitcoin alone consumes 70 per cent of this figure.
Alphabet-owned Google, the world's biggest search engine, uses 12TWh, which is about a 12th of Bitcoin's energy use. Meta Plaftorms' Facebook, the world's largest social network, pales even further in comparison, requiring only 5TWh for its functions – 3.5 per cent of what the cryptocurrency needs.
Norway and Switzerland need only 124TWh and 56TWh, respectively.
The statistics “paint a grim picture for the Earth”, Edith Reads, an author at TradingPlatforms, said.
“The amount of energy that Bitcoin consumes is concerning. Its transactions use more than what some whole countries do at the moment. And this figure is bound to rise because of the asset’s growing mining difficulty that demands more power to execute,” she added.
The environmental impact of Bitcoin and the cryptocurrency market as a whole has attracted a lot of scrutiny.
Bitcoin is the most power-hungry cryptocurrency, with a single transaction requiring an average of 1,173 kilowatt-hours, according to a study by data provider Money Supermarket. Considering the average monthly electricity usage for a UK household is 350kWh, that is enough to power the typical UK home for more than three months, it said.
For comparison, that would equate to about six weeks of electricity based on average US household electricity usage of 877kWh per month.
Meanwhile, Ethereum, the world's second-largest cryptocurrency, needs only 87.29kWh per transaction – a mere 7.4 per cent of what Bitcoin requires. Bitcoin Cash and Litecoin are next on the list, needing only about 19kWh, while the rest of the field do not even reach 1kWh, Money Supermarket said.
In April, Cambridge University researchers reported that Bitcoin's total annual energy consumption surpassed that of the UAE, logging in 120TWh per year compared with the UAE's 119.45TWh.
In the same month, Bloomberg reported that the Nordic region is losing its edge in green Bitcoin mining at a time when the cryptocurrency industry faced growing scrutiny for its carbon emissions and as investors' appetite grew.
And when China, the world's largest power consumer, in June shut down Bitcoin mining operations in Sichuan to address environmental concerns, the cryptocurrency slid below $30,000 for the first time since January.
Ms Reads said Bitcoin's negative reputation stems mainly from its technology, which uses a proof of work consensus mechanism for validating transactions, an energy and hardware-intensive process, releasing a lot of waste into the environment.
“Additionally, a significant proportion of its mining activity uses non-renewable energy resources. These resources are affordable and therefore attractive to many miners. They, including coal, leave a huge carbon footprint on the environment,” she said.
The power consumption of a computer varies depending on the type being used, according to Brussels-based EnerGuide. A desktop uses an average of 200 watt-hours when it is being used, including speakers and a printer. If it is on for eight hours a day, it uses almost 600KWh and emits 175 kilograms of carbon dioxide per year.
A laptop, on the other hand, uses between 50 watt-hours and 100 watt-hours when on. If it is on for eight hours a day, it uses between 150kWh and 300kWh and emits between 44kg and 88kg of carbon dioxide per year. The power consumption of both a desktop and a laptop falls by about a third when they are on standby mode.
Meanwhile, non-fungible tokens – cryptocurrency assets that use blockchain to record the ownership status of digital objects, with each only having one certified owner – is also adding to cryptocurrencies' carbon footprint, as every step of the NFT cycle requires energy. Money Supermarket estimates that the average NFT uses 340kWh and has a carbon footprint of 241kg.
Still, the cryptocurrency market's latest craze uses significantly less energy than some of its cryptocurrency counterparts – but at 0.3 TWh it still uses more electricity than 28 countries, sitting just behind Antigua and Barbuda, it said.
The Bitcoin community has not taken the criticism lying down, with its proponents pointing out that other mundane activities such as the traditional financial system leave a bigger footprint than digital assets, Ms Reads said.
Some of the world's biggest banks – including Morgan Stanley, JPMorgan Chase, Bank of America, Morgan Stanley, Citigroup, Goldman Sachs and Wells Fargo – have made commitments towards slashing their carbon footprint amid pressure from environmentalists and regulators.
The cryptocurrency sector is also pursuing cleaner and greener mining, with part of this shift involving the adoption of renewable energy in validating transactions. These include solar, wind and geothermal power.
The world is projected to emit 36.4 gigatonnes of carbon dioxide in 2021, close to the levels seen in 2019, according to a recent report from the Global Carbon Project research group. Carbon emissions were one of the main sticking points at the recent Cop26 summit in Glasgow, where world leaders wrangled to address the challenge.
As of Thursday morning, the price of Bitcoin was $46,412.75, down almost 3 per cent in the past 24 hours, according to CoinMarketCap data. The overall cryptocurrency sector's market capitalisation stood at more than $2.17 trillion.
