A recent study has highlighted the significant water footprint of Bitcoin transactions, likening the average water consumption to filling a backyard swimming pool. This amount is approximately six million times greater than what’s used in a typical credit card transaction, according to Alex de Vries from Vrije Universiteit Amsterdam.
The substantial water usage is attributed to the energy required to power and cool the vast network of computers globally that Bitcoin depends on. This issue is particularly concerning given the increasing prevalence of fresh water shortages in many regions.
Billion People are Facing Water Scarcity:
Globally, up to three billion people are facing water scarcity, a problem expected to intensify in the coming years. “This is happening in Central Asia, but it’s also happening in the US, especially around California. And that’s only going to get worse as climate change gets worse.
In 2021, Bitcoin’s water consumption was estimated at nearly 1,600 billion liters, or gigalitres (GL), as per a study published in the journal Cell Reports Sustainability. Projections for 2023 suggest this figure could rise to over 2,200 GL.
Primary Reason Behind Bitcoin’s:
The primary reason behind Bitcoin’s high water usage is its reliance on extensive computing power, which demands a significant amount of electricity. Bitcoin’s electricity consumption is comparable to that of the entire country of Poland, based on data from Cambridge University.
Water is utilized in cooling gas and coal-fired power plants, which are major electricity sources. Additionally, significant water loss occurs through evaporation in reservoirs that feed hydroelectric plants. Water is also used in cooling the millions of computers that process Bitcoin transactions.
Mr. de Vries argues that Bitcoin’s water usage could be reduced. He points to the energy-intensive process of “Bitcoin mining” as a key issue. In this process, miners validate transactions in exchange for Bitcoin, competing to complete these validations first. This leads to redundant efforts, with numerous powerful computers working on the same transaction.
He describes this as a global competition of “guess the number,” with these machines collectively making 500 quintillion guesses every second, non-stop.
A shift in Bitcoin’s operational method could significantly reduce its electricity and water consumption. Ethereum, another major cryptocurrency, adopted the “proof of stake” system in September 2022, slashing its power usage by over 99%. However, replicating this change in Bitcoin might be challenging due to its more decentralized management, as noted by Prof. James Davenport from the University of Bath.
The findings of this study have raised concerns among experts. Dr. Larisa Yarovaya, an associate professor of finance at the University of Southampton, expressed worry over the use of freshwater for Bitcoin mining, especially in areas already struggling with water scarcity. She believes this should be a concern for both regulators and the public.