Why is bitcoin bad for the environment? How does bitcoin mining use fossil fuels?

Bitcoin had recently seen a major hike in its value. However, environmentalists have been shedding light on why is bitcoin bad for the environment and answering the question: How does bitcoin mining use fossil fuels? Here is more information about the same, read on to know.

What is bitcoin mining?

Bitcoin mining is a method of generating new coins in which computers are used to solve complex mathematical formulas or puzzles. Cryptocurrencies are built on a decentralised network that must be mined in order to function. Bitcoin mining software is designed to take about 10 minutes on average for those on the network to solve the complex programme and process a block.

Why is bitcoin bad for the environment?

Miners use large and efficient systems to mine blocks and validate transactions, which consumes a significant amount of electricity. The mining process accounts for the vast majority of bitcoin's energy consumption. Miners receive newly generated bitcoins as well as transaction processing fees in exchange for their services.

How does bitcoin mining use fossil fuels?

Cryptocurrency mining often uses electricity produced from fossil fuels. If the price of bitcoin increases, so does the amount of energy consumed. Miners will be even more motivated to mine coins as the price rises, attracting more users to join the bitcoin network.

Bitcoin mining, according to a University of Cambridge study, consumes more than 120 Terawatt Hours (Twh) each year, consuming more energy than Malaysia, Sweden, and Argentina combined. According to the study, if bitcoin were a nation, it would be among the top 30 energy consumers.

Bitcoin price drops after Elon Musk's tweet

Earlier this year, Elon Musk had tweeted that Tesla is thinking about accepting bitcoin as an acceptable form of payment for the purchase of the company’s vehicles. The Tesla CEO had stated that the company would invest $1.5 billion in bitcoin. But several critics questioned his decision and shed light on the impact of the vast amounts of energy used to mine bitcoin. Environmentalists have also warned that carbon emissions from bitcoin mining, which uses a lot of electricity, could jeopardise long-term sustainability efforts.

So, recently, Musk reversed that decision and revealed that Tesla has suspended the use of bitcoin to purchase its vehicles because of climate concerns. He explained in his tweet that the company is concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions. He further added that the increasing use of fossil fuels for bitcoin mining, especially coal, has the worst emissions of any fuel.

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