A recent study conducted by Alex de Vries of Vrije Universiteit Amsterdam reveals that each Bitcoin transaction requires enough water to fill a backyard swimming pool, approximately six million times more than a typical credit card swipe. The substantial water usage is attributed to the energy-intensive process of mining Bitcoin, which involves massive computing power and, consequently, significant electricity consumption. Bitcoin consumed almost 1,600 gigaliters (GL) of water in 2021, a figure expected to surpass 2,200 GL in 2023. The study emphasizes the environmental impact of Bitcoin’s water consumption, particularly in regions already facing water shortages.
Bitcoin’s reliance on proof-of-work, a competitive and power-hungry process among miners, contributes to its high water consumption. The process involves multiple computers competing to audit transactions in a race to complete the audit first. The study suggests that transitioning to alternative consensus mechanisms, such as proof-of-stake, similar to Ethereum’s approach in 2022, could significantly reduce Bitcoin’s electricity use and water consumption. However, implementing such changes in Bitcoin might face challenges due to its decentralised nature.
The study highlights the pressing issue of water scarcity worldwide, affecting up to three billion people, with potential exacerbation due to climate change. Critics argue that Bitcoin’s environmental impact should be a concern for regulators and the public, urging a reevaluation of its energy-intensive mining process.
The findings underscore the broader debate on the sustainability of cryptocurrency and its environmental implications as the industry continues to grow. Concerns over the ecological footprint of digital assets are prompting discussions about transitioning to more energy-efficient consensus mechanisms. The study contributes to ongoing discussions about the environmental responsibility of blockchain technologies and the need for sustainable practices in the cryptocurrency sector.
