How is Bitcoin, a digital currency, bad for the environment?

written by Alexine Bonnemazou

Bitcoin is a digital currency that was created in 2009 anonymously. It is now the largest cryptocurrency and distributed by someone other than the government. Bitcoin can be harvested through "mining." To "mine" bitcoins, one must solve puzzles to add a new block to the blockchain. Then, they are awarded a few bitcoins, a volume that changes with time (ex: was 50 bitcoins in 2009 but only 6.25 in 2020). Solving the puzzle itself doesn't demand much skill, just lots of luck and computing power. The first miner to submit a 64-digit hexadecimal number (the hash) less than or equal to the target one wins. This means that the faster your computer can spit out hashes, the greater your chances are of receiving a few bitcoins (and powerful computers will work the fastest). Considering that a single bitcoin is currently worth around $42,708, that isn't too bad of a deal. Nevertheless, the Bitcoin network tries to have one block produced every 10 minutes. If they want a chance at guessing right, miners must invest in powerful and expensive computer parts.

Here’s an example of a 64-digit hexadecimal number: daeb808f9d9255649e11f2fc90d16be65c012c1853bd21234ad2ccc247772489

Hexadecimal numbers run through 0-15. At 10, they're converted to letters for short. 10 is A, 11 is B, 12 is C, and so on… The first digit in this number is d, so 13. For reference, here's a conversion chart:

To increase their chances, miners even join mining pools — groups of miners who work together and then split the rewards. If bitcoin mining sounds too simple for returns over $42,000, keep in mind that your chances of correctly guessing the hexadecimal number are similar to those of winning the lottery. The last one was 1 in 25.046 Trillion.

So, now that we understand the process of mining Bitcoins, how are they bad for the environment? In a recent Tweet, Elon Musk announced that "Tesla will not be selling any bitcoin" until "mining transitions to more sustainable energy." Previously having had deep pockets in this cryptocurrency (about $2.5 B's worth), Tesla's change of heart is a shock to many. On its own, the tweet sent BTC to a 12% drop. It's no question that Bitcoin uses an incredible amount of energy, much of which is concentrated in China. And China mainly uses coal, a very environmentally unfriendly process. BBC News compared Bitcoin mining's energy usage to that of entire countries, finding that it uses more energy than Argentina. However, some argue that Bitcoin's innovation makes up for it, laying the path towards a greener future. Either way, the tweet has brought along a great deal of controversy around Musk and his reliability. He also makes regular posts talking up Dogecoin: a digital currency brought to its glory through light-hearted supporters. Critics frown down on the extent of the CEO's "games" as he tears Bitcoin's value down and turns his focus to Dogecoin.