Tesla’s initial willingness to accept bitcoin showcases the rise in popularity cryptocurrencies have achieved over the past decade. As we’ve pointed out previously, however, questions over its carbon footprint persist.
Why is it energy intensive?
Bitcoin uses miners who act as auditors – verifying transactions to prevent double spending before adding multiple transactions (blocks) to the chain. Verification involves solving a complex cryptographic hashing puzzle which requires significant computing power – usually comprising of a GPU (graphics processing unit) or an application specific integrated circuit (ASIC). This approach is called Proof of Work (PoW) and rewards miners in bitcoin for their efforts – if successful.
Using fossil fuels to power mining rigs is the main point of concern. China’s bitcoin mining is responsible for 80% of the digital currency’s global trade and its reliance on fossil fuels is projected to generate 130.5 million metric tons of carbon emissions by 2024 if left unchecked.
China’s 2060 carbon neutrality goal, however, is leading to a clampdown on mining operations in the country. The Chinese province of Inner Mongolia, for example, once housed one of largest bitcoin mining networks, but its reliance on fossil fuels forced the government to shut down operations. The province has recently set up a hotline to report suspected bitcoin mining activity.