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Bitcoin and e-waste – is it really that bad?

The debate about Bitcoin’s sustainability is not coming to rest. Proof-of-work mining consumes around 30.7 kilotons of hardware every year. What is left behind is e-waste, consisting of hard drives and chips. What is behind the e-waste that Bitcoin is supposed to be responsible for – is it really that bad?

When it comes to the environment, Bitcoin (BTC) doesn’t have it easy. The new blockchain technology functions as a global, decentralized and self-regulating payment network. It is inevitable that the mining required for this consumes electricity. What many don’t know: The network also needs the energy to protect itself from so-called 51 percent attacks. A 51 percent attack is an attack vector in proof-of-work-based networks. In this case, an attacker or hacker combines more than half of the computing power (hash power) of the network. Thus, he could alter the blockchain and forge entries.

What is e-waste all about?

Like any technology sector, the Bitcoin network produces e-waste. And that’s a constant problem for the environment – not in America or England right on our doorstep, to be sure. But globally through landfills, incineration and waste during recycling

But what exactly is “e-waste”?

  • E-waste refers to any form of discarded or unusable electrical equipment and its individual parts.
  • The term can include broken graphics cards, batteries, rechargeable batteries, the discarded vacuum cleaner, lamps, smartphones and more.

As electronic devices have become indispensable in our digital age, electronic waste is also steadily increasing. In some cases, the waste or at least individual parts can be recycled. This is also necessary, because the devices contain valuable raw materials. These include copper and, above all, so-called critical metals such as gold, neodymium, indium, cobalt, tantalum or palladium. Some components release pollutants and greenhouse gases, including cadmium, lead or mercury. Furthermore, these components can emit substances that are harmful to health.

Chips do not last forever and break down

Bitcoin and the blockchain are new technologies that are also becoming more prevalent in America or monolingual areas. Mining produces e-waste. Example: the ASIC chips used in hardware do not last forever. After a certain period of use, their performance decreases or they give up the ghost right away. This leads to ever larger mountains of scrap mining hardware. In our FAQ we explain what exactly ASIC is all about (see below).

Alex de Vries, founder of Digiconomist

Electronic waste is the result of rapidly obsolete mining hardware that miners are constantly replacing due to competition.

Alex de Vries, founder of Digiconomist

Bitcoin produces 30.7 tons of scrap per year

Alex de Vries, founder of Digiconomist and employed by Dutch Bank, has investigated how much e-scrap bitcoin mining produces in a study. He will publish his calculations in the journal “Resources, Conservation and Recycling” in September 2021. According to the study, BTC mining produces 30,700 tons of e-waste per year (May 2021). The total amount can be compared to the mountain of scrap that smaller IT service providers in the Netherlands produce per year.

Miners often replace hardware early

According to the calculations, the average mining device would end up in the trash after about 1.29 years. Then, according to de Vries, it no longer achieves the necessary performance to mine a new block. Bitcoin miners would replace it with new, better hardware instead. “Miners are competing to develop and deploy more efficient mining hardware to gain a competitive advantage over their rivals,” de Vries says. Hardware is quickly becoming obsolete, and miners often replace it early. Some mining devices had longer lifespans, such as the Antminer S9, he said. Bitmain’s product manages to last an average of 3.9 years.

Furthermore, the study says that the amount of e-waste could increase up to 64.4 kilotons. At least, as long as the price of bitcoin should return to the level of the beginning of 2021. The increasing demand for mining hardware could also lead to supply problems for semiconductors.

272 grams of e-waste per transaction

Calculated on this basis, this would mean the following:

  • Each Bitcoin transaction generates an average of 272 grams of electronic waste
  • This is roughly equivalent to the weight of two iPhone 12 minis. However, this is just about the weight, not the value of the components and materials it contains

Misleading are sensationalist headlines that each Bitcoin transaction would cost two iPhones. As with electricity consumption (Bitcoin uses more and more green energy) and CO2 production, it is worth taking a closer look. For example, de Vries claims in his study that the ASIC miners would end up in the trash after use. No one sells the hardware so that others can reuse it, he says. However, this is not so certain. Used miners for bitcoin can be bought on eBay. Even years after the manufacturer introduced the devices to the market. For example, Antminer S9s can still be found on eBay today for between $400 and $600.

Only 2 percent of all miners verify a transaction

It is well known that Alex de Vries is no friend of Bitcoin. On his platform “Digiconomist,” he and his authors critically examine new technologies. Bitcoin and cryptocurrencies are the main focus here. Perhaps de Vries’ critical stance is no coincidence: the study author works at the Dutch central bank. And banks are known to have a hard time with cryptocurrencies, which could one day replace standard currencies.

Study: poor performance of mining rigs

In a 2020 study, de Vries claimed that 98% of all mining rigs fail to verify transactions. Only a small fraction ever manage to find the hidden hash value and use it to mine a new block.De Vries: “You’re basically participating in a massive lottery and every 10 minutes someone gets lucky and can create the next block.”

According to his reasoning, this makes the majority of mining hardware completely pointless. And e-waste thus unnecessary. But at least most mining devices pool their hash power. Even private miners can earn something with the help of mining pools by sharing the block reward among themselves.

Bitcoin’s share of global e-waste

30.7 kilotons of e-waste produced by Bitcoin may sound like a lot at first. However, compared to the total volume of e-waste worldwide, this is rather little. In fact, total e-waste is expected to amount to 53.6 million tons (53.6 megatons) in 2019. Of that, bitcoin-produced scrap accounts for just 0.056%, according to the International Telecommunications Union (ITU).

Of course, this is not to say that the crypto community does not have to worry about the environmental consequences. These observations are merely meant to clarify the circumstances. Studies like de Vries’ are necessary and important to spark debate. However, a narrative is forming around them that only seems to serve to put Bitcoin in a bad light.

E-waste: perspective matters

Common American and European e-waste includes products such as vacuum cleaners, hair dryers, blenders, washing machines, air conditioners, televisions, phones, and calculators. We could hardly imagine life without most of them. But why don’t we save on e-waste in this area? Are televisions, hair dryers or the lamp indispensable?

As useful as they are, none of them secure a global decentralized crypto-payment network with a market capitalization of $810 billion. Whether it’s electricity consumption or e-waste, it’s ultimately a matter of perspective. Every industry consumes a certain amount of energy and produces a certain amount of waste. But they provide a benefit, which is why we accept the drawbacks.

FAQ – Frequently Asked Questions

Why does crypto mining generate e-waste?

Miners use CPUs, GPUs, and specialized ASIC miners for PoW mining of cryptocurrencies. This hardware runs day and night, performing complex mathematical tasks. Many miners are densely packed in large server farms. Sooner or later, wear and tear sets in. The devices no longer provide the required performance or break down. The hardware has to be disposed of.

Why do miners use ASIC chips for mining?

The larger and more active the Bitcoin network, the higher the demands on mining hardware. Many years ago, Bitcoin could be mined with CPUs and graphics cards. Now, however, the network has grown so much that only powerful ASICs can do the job. Other PoW cryptocurrencies can still be mined with CPUs or graphics cards.

What exactly is meant by ASIC in blockchain?

The abbreviation ASIC stands for “Application-Specific Integrated Circuit”: Application-Specific Integrated Circuit. These are special computer chips with specific functions. Since they are developed solely for this function, they offer the best performance at comparatively low cost. ASIC miners, for example, can only be used for mining.

What happens to e-waste from mining farms?

Many electrical devices, and this also applies to mining farm hardware, can be recycled. When recycling e-waste, one tries to recover the valuable raw materials and materials. These include above all the “critical metals” such as gold, neodymium, indium, cobalt, tantalum and palladium. Sometimes this process produces substances that are harmful to health and the environment. Therefore, e-waste can be a problem for the environment.

Alexander Naumann

Freelance Author | Master in Indology and Pre-Islamic Archaeology Areas of focus: Tokenization | NFTs | Cryptocurrencies | Blockchain Technology

Alexander Naumann

Freier Autor | Master in Indologie und vorislamischer Archäologie
Schwerpunkte: Tokenisierung | NFTs | Kryptowährungen | Blockchain-Technologie