Crypto mining: How does digital currency manufacturing affect environment?

Everyone has heard the latest buzz around cryptocurrency and bitcoin. People have seen prices skyrocket and plunge down to a painful low with the help of Elon Musk’s one tweet or China’s ban on bitcoin mining.

What is crypto mining?

Cryptocurrency is a digital currency that is secured using cryptography and is based on a decentralised network that needs to be mined. This is known as crypto mining.

It is the process of validating transactions of cryptocurrencies digitally, and the records of these are saved in form of blockchains, in which each and every transaction has a separate link to a subsequent transaction, which creates a chain of records.

Mining a bitcoin is a difficult and complex process in which experts solve complicated cryptographic equations with the help of high-tech computer systems to gain cryptocurrencies.

How is crypto mining related to coal mining?

Recently, Elon Musk’s Tesla had started accepting bitcoins as a valid method of payment for products but Musk soon took a U-turn and stopped the new payment method as he feared crypto mining was negatively affecting the environment.

This raises the question that how does crypto mining, which is a code-based process, affect the environment.

The software that mines bitcoin takes nearly 10 minutes for the network participants to unriddle the complex program and process a block. This process consumes a large chunk of electricity to generate every single bitcoin and the major part of the energy is consumed during the mining process.

Crypto mining often relies on electricity which is generated from fossil fuels. As a result of that, as the prices of bitcoin rise, there is a stark increase in energy consumption too. The increasing price of bitcoin motivates miners to mine more bitcoins, which attracts more people to join the new network, and the energy consumption keeps on alarmingly increasing.

A study by the University of Cambridge suggested that crypto mining consumes more than 120 Terawatt Hours (Twh) per year, and this could be one of the top contenders in the list of top 10 energy consumers around the globe if it was a country.

The situation has reached the level where companies are scouting for areas with cheaper electricity to make the crypto mining process tad cheaper and easier.

A few studies have also claimed that crypto mining could also produce enough carbon dioxide to push global warming to more than 2 °C.

While the disadvantages of crypto mining are as clear as the day, several groups are trying to come up with ideas to make cryptocurrencies more sustainable. A supporter of cryptocurrency and owner of Tesla and SpaceX, Elon Musk has also vowed to shift back to cryptocurrencies once they find a bitcoin that uses less than one per cent of the current energy.


  • Bitcoin and other proof-of-work cryptocurrencies require large amounts of energy, due to the computations needed for mining. By the latest estimates, the bitcoin network uses as much energy in one year as the country of Argentina.
  • 65% of bitcoin miners are located in China, a country that generates most of its energy from coal.
  • Some proponents say that as much as 74% of bitcoin’s energy needs come from renewable sources, although these figures are disputed.
  • The bitcoin network also generates 11.5 kilotons of e-waste every year.
  • Not all cryptocurrencies have significant environmental impacts. Many of them do not use mining at all.

Cryptocurrencies Without Mining

It’s also worth noting that a large number of cryptocurrencies have negligible environmental consequences. In particular, proof-of-stake blockchains like EOS and Cardano do not have mining, allowing transactions to be processed with the same energy requirements as an ordinary computer network.

Although this model has clear advantages over mining, it is difficult for an established network to transition to a new consensus mechanism. Ethereum is expected to upgrade to a proof-of-stake blockchain, but the proposal has been disputed by miners, as CoinDesk has reported.

Other Environmental Impacts of Cryptocurrency Mining

In addition to energy consumption, cryptocurrency mining also generates a significant amount of electronic waste as hardware becomes obsolete. This is especially true for Application-Specific Integrated Circuits, specialized hardware for mining the most popular cryptocurrencies.

Unlike other computer hardware, these circuits cannot be reused for any other purpose, and they quickly become obsolete. According to Digiconomist, the bitcoin network generates between eight and 12 thousand tons of electronic waste every year.

The Bottom Line

Whether you’re in favor of cryptocurrencies or against them, there’s little doubt that bitcoin and other proof-of-work blockchains use enormous amounts of energy. Much of this energy usage comes from burning coal and other fossil fuels, although cryptocurrency advocates have argued that renewable sources are also a major component. While the exact figures are disputed, even the best case scenarios indicate that mining is a major factor in carbon dioxide emissions.





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Poorva Tuteja

Poorva Tuteja


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