Bitcoin mining consumes a lot of energy; so much so that a Silicon Valley congressman has recently argued the mining industry needs to deal with a tax based on its energy consumption.
According to Business Insider, Dutch bank ING estimates that a single bitcoin transaction consumes enough electricity to power a home for weeks. Bitcoin’s surge last year, that saw the flagship cryptocurrency hit nearly $20,000 all-time high before its value started dropping, has led to sharp increase in consumed electricity.
In fact, research reports claim that bitcoin’s total energy consumption from last year was superior to the annual usage of 159 countries. Per that same research, if bitcoin mining electricity consumption keeps increasing at its current rate, it will consume all of the world’s energy by February 2020.
Taking all of this into account, in an interview with Business Insider, California Rep. Ro Khanna argued bitcoin mining should be regulated and confronted with taxes. He stated:
“You could have environmental regulations of what could be used or a tax on the use of the mines that are going into the bitcoin, so that if they have externalities that they’re causing the environment, that they have to pay a tax on that.”
According to Khanna, a tax on bitcoin mining would “provide a disincentive” to miners, presumably because it would cut into their profit margins. He added that bitcoin miners “need to be paying a price on it”.
Not stopping there, Khanna further said regulations shouldn’t stop at a carbon tax to stifle the environmental effects of cryptocurrency mining. To him, the “significant criminal aspects” of cryptocurrency use should also be addressed. Per his words, we need more regulations “whether it’s against fraud, whether it’s against environmental harms, whether it’s against the use of bitcoin to foster terrorism”.
Is bitcoin mining that bad?
According to Digiconomist, bitcoin’s current estimated annual electricity consumption is of 49 TWh. The amount of energy consumed keeps on increasing, but this doesn’t mean cryptocurrencies are completely destroying our environment.
Cryptocurrency miners use a lot of energy, and are incentivized to search for cheap, renewable energy sources that will cut their costs by as much as possible. Moreover, as covered by Core Media, they can take advantage of excess energy, as is the case with Russian energy company EuroSibEnergo.
Although bitcoin mining still consumes a lot of energy – part of it generated by burning coal – the Independent claims old-fashioned cash can be worse. This, as zinc needs to be mined to produce coins, and zinc still needs to be transported to a smelter, purified, and moved to the mint before it ends up in our pockets. Estimates point this might’ve produced 107 million pounds of carbon dioxide over the years, just from pennies in the US.