A recent study conducted by the Vrije Universiteit or Vrije University, Amsterdam suggests that every Bitcoin transaction uses an average amount of water equivalent to filling a backyard swimming pool.
This figure is approximately six million times more than the water consumed in a typical credit card transaction. The excessive water usage is attributed to the power and cooling requirements of the millions of computers globally supporting the Bitcoin network.
In 2021, Bitcoin is estimated to have consumed nearly 1,600 billion litres (gigalitres) of water, a figure expected to surpass 2,200 gigaliters in 2023. The study highlights concerns about Bitcoin’s environmental impact, especially in regions already facing water shortages.
The significant water consumption is primarily due to Bitcoin’s reliance on extensive computing power, leading to substantial electricity use.
Bitcoin’s energy consumption is comparable to that of entire countries, such as Poland, according to data from Cambridge University.
The demand for electricity to power Bitcoin’s operations results in water use for cooling gas and coal-fired plants and the evaporation of water from reservoirs supplying hydroelectric plants.
The mining process, where miners compete to audit transactions, is identified as the major contributor to Bitcoin’s water usage.
Alex de Vries of Vrije argues that Bitcoin could significantly reduce its water consumption by altering the “proof of work” method, which involves miners competing to audit transactions.
The “proof of work” method generates extensive computational competition, consuming massive amounts of electricity and water.
Ethereum, another major cryptocurrency, transitioned to a more sustainable system called “proof of stake” in September 2022, reducing its power usage by over 99 per cent. However, implementing a similar change in Bitcoin may face challenges due to its decentralized nature.
The study emphasizes the need for a reassessment of Bitcoin’s environmental impact, especially as water scarcity affects up to three billion people globally, a situation expected to worsen in the future.
Regulators and the public are urged to consider the freshwater consumption associated with Bitcoin mining, particularly in regions grappling with water shortages.
(With inputs from agencies)
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