Impact of mining on the environment. If it has an impact, how can it be reduced? =

There are many different types of cryptocurrencies. Think for example of Litecoin, NEO, Ethereum and of course Bitcoin. These cryptocurrencies run on a blockchain. Within this blockchain, the transactions that are made are validated by the miners. They make sure that everything is correct and that there is no cheating. But because these miners work in a peer-to-peer network, it takes a lot of energy. What is the impact of mining on the environment ? And if it has an impact, how can it be reduced?

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  • View quickly
  • Mining blocks
  • Why would mining have an impact on the environment?
  • The non-scalability also creates problems
  • How much energy does mining actually cost?
  • Comparison with other payment services
  • What could be done about the energy needed for mining?
  • Conclusion

Mining blocks

Let’s first explain why mining costs energy. Simply put, this is due to the consensus algorithm of cryptocurrencies. Every cryptocurrency runs on a blockchain. New blocks containing transactions are continuously added to this blockchain. So when Jan sends to Piet 1 Bitcoin, this transaction is included in a new block.

When the transaction is included in the new block, it is checked whether the transaction is valid. Does Jan have enough Bitcoins to send to Piet? Has Jan entered a valid recipient address? These are a number of points that are checked. If something is wrong, the transaction will not be accepted, and Piet will therefore not receive any Bitcoin from Jan.

Checking the blocks is done by miners. These miners are in fact computers, also called nodes, that are constantly solving a mathematical puzzle. That mathematical puzzle consists of solving several hashes in the binary form. Once the puzzle is solved, the transactions have been verified and the block can be added to the blockchain.

The node that eventually validates the block first gets a reward for this. This reward is different for every blockchain. For example, with the Bitcoin blockchain, the winners receive Bitcoin.

This whole process is called the consensus algorithm. Because all participants of the blockchain can try to validate blocks, the blockchain is decentralized and is called a peer-to-peer network.

Why would mining have an impact on the environment?

But now comes the problem; only one group or person can be the winner. That means there are also a lot of losers. Suppose 10,000 Bitcoin miners are active, then there are in fact 10,000 computers/servers trying to solve the mathematical puzzle in order to get the reward. Ultimately, as said, there will be one miner who has solved the mathematical puzzle. So there are 9,999 miners who have not solved this puzzle.

You could say that the energy they used for this was wasted on nothing. After all, the energy they supplied did not solve a puzzle, nor did it validate a block.

The non-scalability also creates problems

Another problem is that some cryptocurrencies are not scalable. The best example for this is Bitcoin. More and more people believe that Bitcoin is no longer scalable due to the technology that this blockchain uses. There are a lot of miners with Bitcoin. This is, of course, because Bitcoin is the largest and most well-known blockchain and cryptocurrency.

Because there are many miners, you will have to do your best to validate a block. Of course you will have to be a bit lucky to be the fastest, but you can also change it yourself. For example, you can choose to use better hardware for mining.

It takes an average of 10 minutes to mine a Bitcoin block. That is what the makers of Bitcoin have set up that way. In the beginning, you would therefore spend about 10 minutes mining a block with one computer. But if a miner used two computers, it would go a lot faster. And it is. Miners therefore started using better hardware and software in order to mine a block as quickly as possible. The makers of Bitcoin had come up with something for that: the halving.

The halving increases the time it takes to mine a block. If it takes 5 minutes at a given moment, it will take another 15 minutes after the halving, for example. The hardware and software of miners are getting better and better, making it faster again, and then there will be another halving. This process goes on and on. With a halving, the binary hash simply becomes longer, so it takes more time to find the right solution.

Miners are therefore using more and more hardware to mine Bitcoin. True mining farms also exist at the moment. These are large rooms full of servers that are continuously mining Bitcoin. But what if such a server room now runs 24 hours a day, and can only mine a block once a month? That would mean that the farm is mining for 167 hours and 50 minutes for nothing.

It is therefore almost impossible to mine Bitcoin with a normal computer. Bitcoin is no longer scalable, so current miners use more and more hardware to participate in the network. And this hardware also uses more and more energy.

How much energy does mining actually cost?

It is certain that it takes a lot of energy to mine crypto. But how much energy does it actually use? We will have to know that before we know whether it is really as bad for the environment as claimed. We can therefore compare the amount of energy with the energy used by payment services such as Mastercard, Visa and PayPal.

Research has shown that around 3 to 15 million tons of CO2 are emitted worldwide when mining crypto. It is also said that some 31.3 Terawatt hours of electricity are consumed for the Bitcoin network in a year.

The largest emissions are made by China. Here, energy is mainly generated by means of coal, which is not exactly good for the environment. In China, four times as much CO2 is emitted to mine a block than when it happens in Canada. It therefore also depends on where the miners of a cryptocurrency are located. When a country only uses clean energy, it is less bad when there are large mining farms there.

Comparison with other payment services

We now know that it takes a lot of energy to use a cryptocurrency. But how much energy is needed to carry out a transaction with, for example, Mastercard or Visa? It could just be that these payment services use much more energy than Bitcoin. In comparison, it could therefore be that Bitcoin is a much greener choice than the former payment services.

Researchers indicated that Bitcoin uses about 550,000 times more energy per transaction than Visa. However, that is a bit of a distorted picture. With Mastercard and Visa, a lot of transactions of only a few euros are carried out. A Bitcoin transaction consists of an average of $16,000, which is a decent difference. This is because it takes quite a long time and is expensive to perform a small Bitcoin transaction.

What could be done about the energy needed for mining?

Fortunately, there are solutions that can ensure that less energy is needed to mine crypto. There are currently numerous blockchains that are completely focused on this.

One of these solutions is to use a consensus algorithm where miners do not fight against each other, but are chosen. For example, consider Proof of Participation. With this consensus algorithm, miners are chosen by the blockchain to mine a block based on how well they participate in the blockchain. Even if you don’t have large servers at home, you can still be eligible for mining blocks.

In this consensus algorithm, there are almost no people mining one and the same block. As a result, much less energy is used than with a consensus algorithm such as Proof of Work or Proof of Stake.

Something could also be done about the scalability of blockchain. When a blockchain is scalable, miners no longer have to use large server rooms that are constantly mining. Then people who have a simple computer at home could also participate. Such a computer consumes a lot less energy than a large farm of servers.


Mining cryptocurrencies can therefore have an impact on the environment. This differs per cryptocurrency because the consensus algorithm also determines how much power is needed to mine a block. It also depends on the location of the miners. A miner in China uses dirty energy that has a greater impact on the environment than a miner in Canada. This is because energy in China is mainly generated from coal, and there is a lot more green energy in Canada.

In addition to the consensus algorithm, scalability is also one of the problems that ensures that more and more energy is needed to mine Bitcoin, for example.

Fortunately, there are solutions. By using a consensus algorithm like Proof of Participation as a blockchain, miners are chosen to mine, and there are no thousands of nodes doing the same thing at the same time. So a lot less energy is wasted with such a consensus algorithm.



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