The Bitcoin boom can be a disaster for the environment


  Inside a Russian cryptocurrency farm

The phenomenal rise of Bitcoin this year can make speculators very rich, but some observers say it is terrible for the environment.

Once rejected as a dark domain for bugs and criminals, bitcoin has begun to attract major investors. Its price has increased from less than $ 1,000 at the beginning of the year to $ 15,000.

Critics say that the cryptocurrency is a "fraud" and warn of a bubble. Environmentalists worry about another risk: that it is seriously damaging efforts to combat climate change.

"Bitcoin is slowing down the effort to achieve a quick transition away from fossil fuels," meteorologist Eric Holthaus wrote in an article on the Grist environmental news site this week.

Related: What the hell is going on with bitcoin?

Unlike the dollar or the pound, these virtual "currencies" are not linked to a central bank. In contrast, bitcoins are "mined" by computers in vast data centers that consume large amounts of energy.

Bitcoin uses about 32 terawatts of energy each year, enough to power about three million US households, according to the Bitcoin energy consumption index published by Digiconomist, a website focused on digital currencies.

In comparison, processing the billions of Visa ( V ) transactions that take place each year consumes the same amount of energy as only 50,000 American households, according to Digiconomist.

Related: Millions of dollars may have been stolen in bitcoins

More worrisome is that Bitcoin's energy demands are about to explode.

"As Bitcoin grows, the mathematical problems that computers must solve to make more and more bitcoins increasingly difficult" means that more processing power is needed, Holthaus wrote.

And he made a surprising prediction: without a significant change in the way transactions are processed, Bitcoin could be consuming enough electricity to power EE. UU By mid-2019.

Six months later, that demand could equal the world power consumption.

The fact that the majority of bitcoin is mined in China is also fueling environmental concerns.

Related: Bitcoin bubble brewing is still a bargain?

The interior areas of the country have been attractive for the data centers that bitcoin mining requires because "electricity and land are very cheap", researchers at the University of Cambridge wrote in a recent study .

Much of the energy in the province of China comes from inefficient coal power plants that were built in anticipation of major construction projects that never happened, the researchers said.

  What is the future of the virtual currency?

Digiconomist reported that the energy demands of a bitcoin mine that it visited in Inner Mongolia were equivalent to those of a Boeing 747.

The big bitcoin miners have defended their operations, saying Cambridge researchers believe that their Environmental impact is negligible compared to the extraction of natural resources such as oil.

And more green energy sources are being adopted. The HydroMiner in Vienna, for example, uses renewable hydroelectric power for its bitcoin operations

. But some experts are very pessimistic about the future.

Related: Venezuela plans its own version of bitcoin

The Chicago Board of Options and Chicago Mercantile Exchange will allow investors to start betting on the future price of bitcoin later this month.

It is expected to arouse great interest on the part of the great and professional money managers who until now have stayed out of the bitcoin party. It is likely that increased demand for the digital currency will further push energy use.

"CME futures can institutionalize Bitcoin, which would be disastrous [for the environment]," said John Quiggin, an economics professor at the University of Queensland.

Quiggin believes lawmakers will not be able to ignore the consequences much longer.

"Something must be done soon," he said.

CNNMoney (Hong Kong) First publication on December 7, 2017: 8:54 a.m. ET

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