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The cryptomonnaies currently experiencing impressive growth, and bitcoin has recently benefited from an additional impetus with the purchase of $ 1.5 billion of bitcoins by Elon Musk . Faced with this gain in popularity, many personalities have spoken, criticizing the very nature of cryptocurrencies, without necessarily expressing valid arguments. However, for years, experts have pointed to the system on which ( almost ) all cryptocurrency is based , the blockchain, in particular the fact that the latter requires ever more substantial computing power - making it ever more energy-intensive.
The 'mining' of bitcoin (mining) and other cryptocurrencies could have serious environmental and economic repercussions, which could spill over into other industries and could even affect global security, says a new study focusing on the surge in the price of cryptocurrencies.
A study carried out in 2014 by Irish researchers already called any system based on the concept of blockchain as an “energy sink”. The use of proof of work induces a consumption of computing time and therefore of electricity (by the mobilization of servers or networks of individual computers) which is increasing exponentially throughout the world. In fact, this system has been called an environmental disaster by Hyun Song Shin, an internationally renowned South Korean economic theorist and financial economist.
1% of the world's energy is consumed by bitcoin
Bitcoin, or rather bitcoin mining, uses around 1% of the world's energy to date, according to the new study. And if we had to count all cryptocurrencies, this figure would be much higher. Written by financial economist Alex de Vries and published in the journal Joule, the study examines the relationship between the price of bitcoin (which currently stands at over 48,000 euros) and the resulting hidden costs of currency. .
For de Vries, the most urgent and salient point to consider regarding bitcoin's stratospheric rise is its impact on the environment. “ What we can expect is that the network will end up consuming the same amount of electricity as all data centers, globally. The carbon footprint associated with this consumption will be the size of that of London, ”de Vries told Technology Networks .
Bitcoin encryption requires users to "mine" the currency by deploying computing resources to solve complex mathematical equations. Bitcoins are distributed in a regimented and random fashion, which means that for miners the only way to increase their chances of finding “digital gold” is to use more and more computer resources to mine. While in theory any processing unit with an internet connection can be used for mining, in practice professional bitcoin mining centers operate highly specialized and power-hungry devices.
These machines are fueling the bitcoin economy, which totals around 120 million transactions per year, and that's just the start. This is only a tiny fraction of the more than 500 billion transactions carried out by the global financial system, de Vries points out. Nonetheless, he estimates that bitcoin uses about one percent of the world's energy to mine currency, a staggering figure that will only increase as the price of bitcoin is fueled by increased interest.
De Vries' analysis established a link between the price of bitcoin and its energy consumption by analyzing the amount miners pay for their electricity, estimated at around 60% of the total cost of their operations.
What is particularly worrying for de Vries is the “locked in” nature of much of the energy consumption. Its analysis indicates that many suppliers of bitcoin mining devices have run out of stocks, with orders pending for several months. Even if the price of bitcoin collapses, as it did at the end of 2017, miners will be forced to use their machines because their purchase is a non-refundable sunk cost that they will have to recover through mining, even at lower prices, suggests de Vries. This guarantees a huge energy demand, even for a devalued bitcoin.
Waste and shortage of electronic components
De Vries' analysis goes beyond the direct environmental impact of bitcoin, which remains a very controversial topic. It also stresses that secondary impacts will come from the short lifespan of current mining devices. “ This results in a big pile of electronic waste from specialized equipment that cannot be reused, ” he writes.
These devices also contribute to the global shortage of computer chips, writes de Vries. " These bitcoin miners want the same chips we need for our phones or for self-driving electric vehicles ." The bottleneck here is so big that to produce just one million units of the most powerful mining device, Bitmain's Antminer S19 Pro , it would take about half of the world's chip production for a period of one. whole month.
The anonymous and decentralized nature of bitcoin would allow countries like Iran (where 8% of global bitcoin production is currently based) to avoid economic sanctions by diverting oil intended for export to fuel bitcoin mining. , still according to de Vries. Since these sanctions were originally put in place to prevent the proliferation of nuclear weapons, he points out that the fallout from bitcoin now encompasses international security concerns.
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Could miners switch to renewable energy sources? de Vries admits that this is a possible path, but points out that fossil fuels remain the main source of energy for money. According to him, policymakers may have to take drastic measures to regulate this decentralized currency.
If bitcoin's current trajectory continues, its staggering energy consumption will increase exponentially. de Vries acknowledges that bitcoin has already exceeded the highest estimate calculated in his article, which was written in January 2021. At the current price of bitcoin, he estimates that mining operations could consume up to 241 TWh of energy. , more than Australia's total annual energy consumption .