Bitcoin Uses More Energy Than American Airlines, Report Says in Light of Environmental Concerns
The cryptocurrency relies heavily on the use of electricity from coal-fired power plants.
Citing a Bank of America report that was published last Wednesday, the outlet said that analysts estimate that a $1 billion investment in the cryptocurrency would produce the same carbon emissions as 1.2 million cars.
"We believe ESG-minded [environmental, social, and governance] investors have to pay attention to the enormous environmental costs of Bitcoin," the analysts wrote.
The cryptocurrency's energy consumption, which has increased about 200% in the last two years, is already alarmingly similar to that of the Netherlands, Czech Republic and Greece, the study pointed out. Much of that consumption has occurred in China, where more than half of the Bitcoin mining occurs. Mining in the country relies heavily on electricity that comes from coal-fired power plants, many of which are based in the Xinjiang province.
The release of Bank of America's report came just days after economist Jeffrey Sachs also criticized Bitcoin at a conference, calling Bitcoin mining "an unbelievable waste of resources and a highly polluting waste of power."
Bitcoin mining occurs when a miner adds a block — or group — of approved transactions to an existing blockchain. Oftentimes, the miner must solve a series of complex equations before being able to do so. In return, the miner gets a number of Bitcoins as a reward. Because the computational process is incredibly sophisticated, miners often use hardware that consumes an enormous of electricity.
In noting the cryptocurrency's effect on the environment, the Bank of America study also found that "a single [Bitcoin] purchase at a price of ~$50,000 has a carbon footprint of 270 tons, the equivalent of 60 ICE [petrol/diesel] cars."
Justin Chan is a news writer at Entrepreneur.com. Previously, he was a trending news editor at Verizon Media, where he covered entrepreneurship, lifestyle, pop culture, and tech. He was also an assistant web editor at Architectural Record, where he wrote on architecture, travel, and design. Chan has additionally written for Forbes, Reader's Digest, Time Out New York, HuffPost, Complex, and Mic. He is a 2013 graduate of Columbia Journalism School, where he studied magazine journalism. Follow him on Twitter at @jchan1109.