Cryptocurrency’s Thirst: A Single Bitcoin Transaction Consumes a Pool’s Worth of Water

by Klaus Müller
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Bitcoin Mining's Water Impact

The research conducted by Alex de Vries sheds light on the substantial water consumption associated with Bitcoin mining, which is exacerbating the global water crisis. This issue is particularly severe in regions that already face water scarcity, such as the United States and Central Asia. De Vries has proposed potential solutions, including software modifications and the adoption of renewable energy sources, but he has also highlighted the practical challenges in implementing these measures.

Bitcoin mining is known for its extensive use of water, which is a concerning factor amidst the ongoing global water crisis. In a recent commentary published in Cell Reports Sustainability on November 29, financial economist Alex de Vries provided a comprehensive estimate of the water usage linked to Bitcoin mining. He raises alarms about the sheer scale of water consumption, especially in regions already grappling with water scarcity, like the United States.

De Vries, a PhD student at Vrije Universiteit Amsterdam, points out the increasing scarcity of freshwater in many parts of the world due to droughts and other factors. He underscores the irony of using this valuable resource for what he terms as “useless computations.”

Bitcoin mining involves miners worldwide racing to solve complex mathematical equations to earn a share of Bitcoin’s value. This process generates a massive amount of computing power. However, the majority of these computations serve no further purpose and are immediately discarded, according to de Vries.

Notably, a significant amount of water is utilized to cool the computers at large data centers used for Bitcoin mining. Based on previous research data, de Vries estimates that Bitcoin mining consumes between 8.6 and 35.1 gigaliters of water per year in the United States. Additionally, the power plants supplying electricity to run these computers, which are often coal- and gas-fired, also require water for cooling. This cooling water is evaporated and cannot be reused, further contributing to Bitcoin’s water footprint. Hydropower plants also add to this footprint due to water evaporation.

Bitcoin, created in 2008 by an entity or individual using the pseudonym Satoshi Nakamoto, operates as a decentralized digital currency. It functions on a peer-to-peer network, enabling users to send and receive bitcoins through digitally signed messages broadcast to the network. Transactions are recorded in a public ledger called a blockchain.

De Vries estimates that Bitcoin mining consumed over 1,600 gigaliters of water worldwide in 2021. Astonishingly, each Bitcoin transaction on the blockchain uses an average of 16,000 liters of water, making it approximately 6.2 million times more water-intensive than a typical credit card transaction or enough to fill a backyard swimming pool. This water consumption is expected to rise to 2,300 gigaliters in 2023.

In the United States, Bitcoin mining consumes a significant amount of water, ranging from 93 to 120 gigaliters annually. This is equivalent to the average water consumption of 300,000 U.S. households or a city like Washington, D.C.

De Vries emphasizes a concerning correlation between the price of Bitcoin and its environmental impact. As Bitcoin’s price increases, so does its environmental footprint. He expresses frustration that cryptocurrency mining consumes vast computational power and resources without creating tangible benefits, such as advancements in artificial intelligence or other useful applications.

Countries in Central Asia, already facing water supply pressure due to their arid climates, are particularly susceptible to the impact of increased Bitcoin mining activities. For instance, in Kazakhstan, a prominent global cryptocurrency mining hub, Bitcoin transactions consumed a staggering 997.9 gigaliters of water in 2021, exacerbating the country’s existing water crisis.

To address these challenges, de Vries proposes potential solutions, including modifying Bitcoin mining software to reduce its power and water requirements. He also suggests transitioning to renewable energy sources like wind and solar to decrease water consumption. However, he acknowledges the limitations of renewable energy availability in many regions, such as the United States, where the supply of renewable energy is constrained. Consequently, there may be a trade-off, as diverting renewable energy to cryptocurrency mining could lead to increased use of fossil fuels in other sectors.

Reference: “Bitcoin’s growing water footprint” by Alex de Vries, 29 November 2023, Cell Reports Sustainability. DOI: 10.1016/j.crsus.2023.100004

Frequently Asked Questions (FAQs) about Bitcoin Mining’s Water Impact

What is the main concern highlighted in the text regarding Bitcoin mining?

The main concern highlighted in the text is the substantial water consumption associated with Bitcoin mining, which exacerbates the global water crisis, particularly in water-scarce regions.

Who conducted the research discussed in the text?

The research was conducted by financial economist Alex de Vries, a PhD student at Vrije Universiteit Amsterdam.

How much water does Bitcoin mining consume annually in the United States?

Bitcoin mining in the United States is estimated to consume between 8.6 and 35.1 gigaliters of water per year, depending on various factors.

What is the expected trend in Bitcoin’s water consumption in the near future?

The text mentions that Bitcoin’s water consumption is expected to increase to 2,300 gigaliters in 2023.

How does the water consumption of Bitcoin transactions compare to a credit card transaction?

On average, each Bitcoin transaction on the blockchain uses 16,000 liters of water, making it approximately 6.2 million times more water-intensive than a typical credit card transaction.

What potential solutions are proposed to address the water consumption issue in Bitcoin mining?

Alex de Vries suggests potential solutions such as modifying Bitcoin mining software to reduce power and water requirements and transitioning to renewable energy sources like wind and solar to decrease water consumption.

What is the relationship between the price of Bitcoin and its environmental impact, according to the text?

The text notes that as the price of Bitcoin increases, its environmental impact also rises, which raises concerns about the sustainability of cryptocurrency mining.

More about Bitcoin Mining’s Water Impact

  • “Bitcoin’s growing water footprint” by Alex de Vries, 29 November 2023, Cell Reports Sustainability. DOI: 10.1016/j.crsus.2023.100004
  • “The environmental impact of cryptocurrency mining” – Previous research on cryptocurrency mining’s environmental impact.

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