A new report assessed the environmental impact of Bitcoin and other cryptoassets, casting a particularly harsh light on BTC. It claimed that one Bitcoin transaction uses as much power as an average UK home does in three weeks.
Renewables in the global hashrate and carbon offsets are important metrics, but difficult to fully quantify. Currently, it seems like electricity costs are the most reliable way to measure a blockchain’s green credentials.
Bitcoin’s Shocking Environmental Impact
Since the early days of Bitcoin, crypto’s environmental impact has been a long-running concern in the industry, especially because it’s a lightning rod for political pushback.
Although Web3 firms of all stripes frequently market their green bona fides, it can be hard to properly quantify this, which is why researchers conducted a thorough study:
Crypto Projects by Environmental Impact. Source: DayTrading.com
Its report was especially critical of Bitcoin, using it as a stand-in for Proof of Work blockchain protocols as a whole.
These projects have an exponentially higher environmental impact than other cryptoassets; one Bitcoin transaction can use more electricity than an average British household consumes in three weeks.
However, raw electricity consumption isn’t the only relevant metric here. Although renewable energy can power Bitcoin mining, coal is also a significant contributor to the global hash rate.
Similarly, some firms advertise their carbon offset purchases, yet many scientists now believe this metric is deeply flawed.
Many Considerations to Calculate
For these reasons, assessing Bitcoin’s true environmental cost is a very complicated business. The report determined that only a few cryptoassets can compete with TradFi payment platforms like credit cards: Solana, Algorand, and NANO stand out in particular.
“When I tested these networks myself, it felt like something must be wrong comparing numbers side by side. The difference between sending a Bitcoin transaction and sending one on Solana was like comparing a cross-Atlantic flight to flicking on a light switch,” claimed Paul Holmes, the report’s author.
These networks are designed to be as “lightweight” as possible, using minimal electricity. Many projects like HBAR and Cardano supplement this structure with carbon offsets, but objectively assessing their effectiveness isn’t easy. One recent example shows why up-front blockchain efficiency is so important.
Ethereum used to have a comparable environmental impact to Bitcoin, but the Merge in 2022 reduced its energy consumption by over 99%. This highlights the disparity between Proof of Work and Proof of Stake blockchains, making BTC seem outdated.
However, despite this vast improvement, ETH still emits far more carbon than blockchains that always focus on efficiency. Practically speaking, Solana is the largest “ultra-light” protocol that can reliably compete with TradFi payment platforms’ energy use.
To be clear, Bitcoin still has many distinct uses, but its environmental impact is probably irreparable. Conscious crypto enthusiasts should be aware of these considerations.
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