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Bitcoins hold the potential to revolutionise our economy in so many incredible ways. But maybe it is time to ask ourselves whether we are ready to embrace the dawn of technological revolution if it means it comes with a huge impact on our environment. Why? Because the brutal if unintended consequence of one of 21st century's most promising technologies is that it relies on a very energy-intensive production process termed "bitcoin mining."
99 per cent of all bitcoin mining operations around the world are run on supercomputers termed "mining machines," which are connected to the cryptocurrency network. And the sole purpose of these supercomputers is to verify the origin of bitcoin transactions by solving a set of highly complex mathematical equations. While it is not necessary to run these mathematical equations to 100 per cent verify the origin, it has become the trusted verification system for a global cryptocurrency network to ensure that no one is tampering with a global record of transactions.
So every time a cryptocurrency supercomputer is trying to run these mathematical equations, the one who has the highest likelihood of winning the transactions will be rewarded with a small set of bitcoins. The faster your computer, the higher your processing power, the more likely you are to be the winner of bitcoin mines. So to make as much money as possible from this process, bitcoin miners will try to stack up on supercomputers, filling up warehouses, industrial parks, or even villages with a huge amount of supercomputer processing power.
Of course, the problem is that the bitcoin ecosystem is one that is very resource and energy-intensive, relying on the latest state-of-the-art cooling and equipment technology. That energy demand is so large that it consumes as much as seven gigawatt hours in a whole year, or almost as much as 0.21 per cent of global energy demand. It may not sound like a lot, but actually, with the same amount of electricity, you can power a whole country the size of Switzerland, while a single bitcoin transaction consumes as much electricity as 18 US households in a full day.
But sourcing such large amount of energy, it can't be done everywhere without biting into the profit margins of bitcoin miners. You need a country with relaxed environmental standards, large amount of energy, and cheap electricity prices. To most miners, one place comes to mind, namely China, which is home to 3/4 of global bitcoin mining operation. However, China operates on one of the world's most dirtiest sources of energy, coal.
But if we keep going at the same rate that we've been doing so far, if we keep pushing bitcoin mining operations, actually, we may be able to push the planet beyond two-degree warming as fast as in the next two decades. And that is scary. Because once we reach 1.5-degree warming, the impact on our global ecosystems are going to be catastrophic and irreversible.
