Coin accounts for 0.4% of global energy consumption, BofA says Consumption may rival that of some of the largest countries
Bitcoin’s massive rally over the past year means it’s only getting worse for the environment.
The energy used by the network of computers that power the
digital coin is comparable to that of many developed countries and
rivals the emissions from major fossil-fuel users and producers such as
American Airlines Group Inc. and ConocoPhillips, according to a report
by Bank of America Corp. The level of emissions, which have risen
alongside a spike in Bitcoin’s price, have grown by more than 40 million
tons in the past two years. And when the digital asset is trading
around $50,000 -- which it’s done for much of this year -- it uses about
0.4% of global energy consumption.
More worrisome, according to the report
titled “Bitcoin’s dirty little secrets,” is that rising prices may mean
Bitcoin’s energy consumption will soon rival that of some of the
largest countries in the world.
“What I’m concerned about is the pace of growth in the demand
for energy,” Francisco Blanch, head of commodities and derivatives
research at Bank of America and lead author of the report, said in an
interview. “The rate of change is enormous -- nothing is growing at this
pace in the energy world.”
Bitcoin
has skyrocketed into the limelight during the Covid-19 pandemic amid
unprecedented fiscal and monetary stimulus that’s been a boon to
more-speculative parts of the financial markets. The world’s largest
cryptocurrency surged almost 10-fold in the past year. That’s meant
greater energy use, too.
Because the coin’s supply is limited,
any excess demand could push prices even higher. Rising prices
encourage more so-called mining activity and may consequently push CO2
emissions up even more, according to Bank of America.
Bitcoin
transactions are processed by miners -- crypto slang for companies that
operate a vast array of computers. Miners compete to confirm
transactions and get new coins awarded in return -- but they require
huge amounts of energy to run. Buoyed by increased competition, only a
handful of such firms -- most China-based -- controlled about 50% of all
the computing power on the network, Bloomberg News reported last year....
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