Bitcoin mining

Bitcoin mining

Subject: Science and Technology

Context: Minister of State for Finance Ministry Pankaj Chaudhary also informed the Lok Sabha that “the government does not collect data on environmental impact due to mining of cryptocurrency.”

Concept:

Crypto investments in India grew from $923 million in April 2020 to $6.6 billion in May 2021 – a 615 per cent jump, according to a recent study by blockchain data platform Chainalysis.

How Bitcoin mining works?

• Bitcoin mining is a process of creating a new coin that involves using computers to solve complex mathematical algorithms or puzzles. The cryptocurrencies are based on a decentralized network that needs to be mined.
• The software that mines bitcoin is designed to take on average about 10 minutes for those on the network to solve the complex program and process a block.

Impact of Bitcoin mining

• The process ends up using a massive chunk of electricity as giant and powerful systems are used by miners to mine blocks and verify transactions. The vast majority of Bitcoin’s energy consumption happens during the mining process.
• Mining for the cryptocurrency often relies on electricity generated with fossil fuels. As bitcoin price rises, so does the energy consumption.
• Environmentalists have also warned that carbon emissions from power-intensive bitcoin mining could harm sustainability efforts.
• An index complied by Digiconomist that publishes estimates of bitcoin’s climate impact showed also that it consumes an estimate of around 115 Twh per year. A study by the research platform stated that the Bitcoin network could consume as much energy as all data centers globally, with an associated carbon footprint matching London’s footprint size.
• Bitcoin could alone produce enough carbon dioxide emissions to push global warming above 2 °C within less than three decades. Most – some 65% – mining facilities are located in regions that rely on (highly polluting) coal-based facilities or hydroelectricity, which are cheap and little taxed
• Bitcoin’s accounts for the e-waste output resulting from mining equipment being disposed of.