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Blockchain & crypto coins: electricity from coal-fired power station

Crypto transactions via the blockchain need a lot of electricity. Most of the energy comes from coal-fired power plants. Despite climate-hostile CO2 pollution, blockchain technology is spreading rapidly. Bitcoin’s energy dependence on China was recently demonstrated by an accident in a coal mine.

Children demonstrate on Fridays for a better climate. They are also happy to skip a lesson at school to do so. Large cars have become an enemy image for many people. And anyone who goes on vacation by plane is a climate polluter anyway.

Just a frog running across the street?

But what is climate anyway? Climate is a man-made statistical documentation. An abstract quantity. It is not a frog that we can help across the street. That we can protect. We can’t protect a formula from its result either. Love for our environment begins with our actions. Even with electricity consumption. One thing is certain: many of our world’s power plants already operate exclusively for the digital world.

Servers: Often 24 hours of power consumption

A computer in the office works a good eight hours a day. A web server is active twenty-four hours a day. Seven days a week. The world’s websites, for example, are stored on a web server. It probably takes several power plants to run these millions of computers and servers. And then there are those little computerized helpers in everyday life: smartphones.

Electricity consumption of countries per year

All figures in terawatt hours (TWh)

Source: University of Cambridge, as of 2021

Crypto boom: mining is a power hog

Crypto transactions via the blockchain require an enormous amount of electricity. This is because they require a high level of computing power. This is also by design: The encryption of a transaction can be proven over many computers connected to the blockchain network. Computing power means power consumption. And that’s no small amount: the so-called “mining” of Bitcoin transactions alone consumes around 117 terawatt hours per year. Mining or “miner” refers to the Bitcoin data centers set up decentrally around the world.

Renewable energy for cryptocurrencies?

Cryptocurrencies have a forward-looking image. Is the energy supply for these new digital currencies also innovative? Unfortunately, no, as the following details show:

  • The share of renewable energy for the supply of crypto computing power is comparatively low.
  • Around half of the power supply for mining comes from China. Mainly from Inner Mongolia and Xinjiang, as New Scientist reports.
  • There, coal-fired power stations produce cheap electricity, but pollute the climate massively through CO2 emissions.
  • Countries such as Russia, Canada and Iran are also important for the power supply of the computers integrated into the blockchain system. Here, too, fossil fuels are very cheap.

Cryptos cause a lot of CO2

Experts do not agree on how many tons of carbon dioxide cryptocurrencies release. Specialists from the University of Hawaii believe that 69 million tons of carbon dioxide are released into the environment every year because of artificial currencies. Crypto energy bashing by politicians, journalists and business leaders is therefore commonplace. But beware: blockchain technology itself is not the same as cryptocurrencies when it comes to energy. Not every blockchain application results in high energy consumption.

Blockchain technology for environmental protection

Blockchain doesn’t just work against environmental protection, however. It can conversely be used for environmental projects as well. For example, it can document paper consumption in companies. It also supports business models that solve social or ecological problems. The property of recording data immutably offers excellent potential for environmental protection. WWF’s Non Fungible Animals can be used to protect endangered species. Among other things, the blockchain can:

  • Record changes in ecosystems
  • Provide evidence of eco-certifications
  • Document responsible fishing practices
  • Monitor supply chains
  • Regional blockchain networks help avoid art waste

FAQ – Frequently asked questions

What is a coal-fired power plant and why is CO2 produced?

A coal-fired power plant converts thermal energy into electrical energy using steam. For the energy generation process, coal is ground and then blown into the combustion chamber where it is burned. The steam then flows through a turbine and drives the turbine blades. Coal combustion produces CO2, which is released directly into the environment.

Are blockchain and crypto coins dependent on coal-fired power plants?

Yes. This is illustrated by an accident at the Fengyuan coal mine in western China’s Xinjiang province in early April 2021. Due to safety issues, authorities closed the coal mine. Due to the lack of fuel, the computing power of the Bitcoin network collapsed by up to 40%. The power reduction could be measured by the hashrate (the speed of solving complex computational problems that create new Bitcoins).

Where does the energy for Bitcoins mainly come from?

About 70 percent of Bitcoin mining takes place in China (Xinjiang region), according to data from Cambridge University. Inner Mongolia is another Chinese coal province. The latter has asked cryptominers to close their operations by the end of April 2021.

How is cryptocurrency calculated?

"Crypto" means encryption. The blockchain ensures that it stores all data on holders and movements in encrypted form. And not just on one server, but on several thousand simultaneously. Every transaction is thus stored decentrally on a network. Mining computer farms calculate the artificial money. In addition, each transaction via the blockchain also requires its computing power. The power consumption of a Bitcoin transaction is about 695,000 times as power-intensive as paying with a credit card. The purchase of the special computers for the mining farms is also a burden on the environment. These have a service life of only 18 months. Then they are replaced again. A single Bitcoin transaction thus corresponds to about 135 grams of electronic waste.

Thomas Grether

Journalist | Editor | Entrepreneur & Environmental Scientist.
Main focus: Tokenization | Digital Transformation Processes in Companies | Internet and Web Publishing | Environment

Thomas Grether

Journalist | Redakteur | Unternehmer & Umweltwissenschaftler
Schwerpunkte: Tokenisierung | Digitale Transformationsprozesse in Firmen | Internet und Webpublishing | Umwelt