Since its launch in the year 2009, bitcoin’s popularity has seen an ever-increasing trend. The year 2021 saw a sharp increase in the value of bitcoin after Elon Musk, the Tesla CEO decided to invest in bitcoin. Tesla announced that it will receive payments for its cars via bitcoin. This caused a sharp spike in the worth of bitcoin.
The world witnessed the greatest dip in the value of bitcoin when Elon Musk announced that Tesla will no longer accept payments in the form of Bitcoin. While the news left the world astonished, what led Tesla to make this huge decision? What is actually bitcoin mining and what does it mean for the environment.
Why does Bitcoin pose a Threat to the Environment
The mining of bitcoin is a long and tedious process, one which requires a lot of energy in the form of electricity. Before we indulge in the conversation about bitcoin, let us briefly discuss how the consumption of electricity affects the environment.
How is High Electricity consumption Bad for the environment
The mining process of bitcoin uses huge supercomputers to solve complex math puzzles. To achieve this the supercomputers require electricity. Although many alternatives to fossil fuels have been introduced, still their application and usage are not widespread. The majority of power generated comes from burning different fossil fuels.
When fossil fuels burn they release carbon dioxide gas, which is a highly potent greenhouse gas. It causes the temperature of the earth to rise to an alarming extent. The use of fossil fuels for the production of electricity is a highly energy inefficient process. A large quantity of fossil fuels needs to be burned to produce a small amount of electric power.
The last century has already seen a 1 increase in the earth’s average surface temperature. If we do not act now, this can have catastrophic results. Climate change and global warming do not necessarily mean hotter weather. It causes every weather to be extreme. More violent thunderstorms, more powerful blizzards, extra rainfall, hotter sunny days, colder windy nights, and so on.
How much electricity does Bitcoin Consume?
The bitcoin mining process consumes huge amounts of electric power. Its power consumption is so huge, that it is the same as the total power consumption of entire countries like Sweden, Malaysia, etc. This is a huge concern for the environment, as most of the electricity produced comes from burning coal; which is the most potent and dangerous fossil fuel of all.
The environmental impact caused by producing electricity at such a scale is highly dangerous for the environment A single transaction of bitcoin, for example, has the same carbon footprint as 680,000 Visa transactions or bingeing YouTube for 51,210 hours
What is Bitcoin Mining
The process of adding new transactions to the bitcoin blockchain is called bitcoin mining. It is an extremely hard and tedious process, requiring powerful computers. In order to mine bitcoin, people need to solve complex math puzzles. For this purpose, people use computers.
This is a highly competitive race that has big rewards. To keep people engaged and to have them continually racing bitcoin awards them with new coins. This is the method to create new coins and add new coins to the blockchain.
This process gets tougher and tougher with the passage of time. When bitcoin was newly launched, its difficulty level was suitable for an average miner to be successful. Today the same process is highly difficult and complex. It is now impossible for an average miner of that time to gain a fortune now.
With the increase in the difficulty levels of mining, the quality and quantity of the computers being used have increased dramatically. The number of computers being used has increased exponentially. More computers mean more power consumption, and to bridge the gap between supply and demand, power consumption has also increased exponentially.
Another factor that adds to the carbon footprint of bitcoin is that the amount of rewards has decreased. Bitcoin mining now pays less than it used to. In 2009, when bitcoin started, the number of coins that were awarded every time anyone got a stamp was far greater than it is now. Therefore, to earn the same amount of awards today, the number of transactions that need to be made is greater.
All of these factors collectively add to the carbon footprint of Bitcoin.
What does it hold for Bitcoin?
Since the announcement of Elon Musk about Tesla’s refusal to accept payments through bitcoin, the magical cryptocurrency has seen a historic dip. Elon must say in his tweet that Tesla will not accept payments because of environmental concerns.
Musk was specifically worried about the use of coal in the production of electricity. This has raised possibilities for other cryptocurrencies to see an increase in their worth. This should lead bitcoin towards local SEO services to improve their credibility and regain their worth.
Elon Musk has gained a reputation as a crazy genius. He went from a totally anonymous commoner to being the world’s richest man in 2021. Having an exceptional scientific background, Elon fully understands the scientific and technical details of the system.
He has said that Tesla will start accepting bitcoin, as soon as it becomes more sustainable and switch to green energy alternatives. This also raises questions, as to why Elon is worried about the environment on the earth, as he is already planning colonization on Mars.
Elon Musk is notorious for his plans to make space travel commercial and to colonize Mars. He thinks that the only way to save human civilization is to colonize another planet. He has been seen in numerous interviews, debating prominent world leaders and big businesses about sustaining the earth. Most of them have opposed the idea of Musk and disagree with him.
Tesla’s decision about bitcoin has left many questions for world business and the economy. While most people wonder about the money problems, environmentalists and their supporters have hailed the decision coming from Musk.