In recent years, the environmental impact of cryptocurrencies, particularly bitcoin, has come under increased scrutiny. While much attention has been focused on their energy consumption and carbon emissions, a new concern has emerged – water usage. According to Alex de Vries at the VU Amsterdam School of Business and Economics, a single bitcoin transaction consumes a staggering 16,000 litres of clean water, equivalent to filling a small swimming pool.
The water footprint of bitcoin mining, responsible for securing the network through complex computational processes, is estimated to be between 8.6 and 35.1 billion litres per year in the US alone. Globally, bitcoin used 1.6 trillion litres of water in 2021, with projections indicating an increase to 2.3 trillion litres in 2023. Broken down per transaction, this means a significant environmental cost, raising concerns about the sustainability of cryptocurrency practices.
The majority of this water consumption is tied to electricity production, including coal and gas plants, as well as hydroelectric power stations. Data centers, where the powerful hardware used by miners is housed, also contribute directly to water use. The environmental impact is exacerbated by the fact that mining activities often occur in regions facing water scarcity, amplifying the strain on local water resources.
While the water footprint of bitcoin is alarming, it is overshadowed by the broader issue of its energy demands. Bitcoin's mining process, essentially generating random numbers, has been criticized for its inefficiency and lack of tangible output. Unlike competing cryptocurrencies like Ethereum, which have made significant changes to reduce energy consumption, bitcoin has been hesitant to adopt similar reforms due to its decentralized nature.
Efforts to address the water footprint of bitcoin include suggestions for miners to implement immersion cooling and consider power sources that don't rely on freshwater. However, the key solution lies in modifying the underlying software, as demonstrated by Ethereum's successful reduction in resource intensity through the adoption of proof of stake (PoS). Despite the availability of such solutions, the decentralized nature of the bitcoin community poses challenges to implementing these changes.
In conclusion, the revelation of bitcoin's substantial water footprint adds a new layer to the ongoing discussion about the environmental sustainability of cryptocurrencies. As the world grapples with growing concerns over water scarcity and climate change, the cryptocurrency industry faces increasing pressure to adopt more eco-friendly practices. The debate surrounding the environmental impact of bitcoin continues, emphasizing the need for responsible approaches and technological innovations to mitigate its ecological footprint.