(NewsNation) — As the cryptocurrency industry is growing quickly, so are the concerns about its effects on the environment.
Alex de Vries, the author of a study explaining why Bitcoin and other cryptocurrencies are environmental killers, explained the issue Sunday on “NewsNation Prime.” He is the founder of Digiconomist and a data scientist who created the Bitcoin Energy Consumption Index.
“These assets, like Bitcoin, are running on what is known as mining,” De Vries said. “That means that in the background, you have these really massive random number generators just constantly running.”
A cryptocurrency is a digital representation of value that, unlike traditional money, isn’t issued by any central bank or agency. Cryptocurrencies are powered by blockchain technology, which allows the exchange of virtual coins such as bitcoin and ether.
Cryptocurrency mining is the process of creating new coins by solving complex mathematical problems. The mining process also validates transactions on the cryptocurrency’s network, proving that they’re genuine.
“If you want to help create new blocks of transactions to the underlying blockchain, or Bitcoin, you need to first guess a certain winning number that will allow you to do that,” De Vries said.
The mining activities of pioneering blockchains including Bitcoin are based on proof of work and thus use enormous amounts of energy.
Although renewable energy is now being used to power some cryptocurrency activities, that energy could surely be put to better use elsewhere, he suggested; for example, to power homes or businesses.
The estimated power needed to run the Bitcoin network across the world is an extraordinary 7.46 gigawatts per year. For comparison, in 2020 an average-sized nuclear plant produced around 1GW of electrical power in a year. The energy required for just one bitcoin transaction could power the average US home for more than 70 days.
“The whole network is generating something like 200 quintillion guesses every second of the day, nonstop,” De Vries said, “and that’s just using so much energy.”
Together, Bitcoin and Ethereum mining operations emit more than 70 million tons of CO² into the atmosphere. That’s the same as the annual exhaust emissions of more than 15.5 million cars.
Watch the full interview with Alex de Vries in the video player at the top of the page.
Reuters contributed to this report.