Cryptocurrencies have ushered in a new and improved way of conducting business. These digital coins – thanks to blockchain technology- have enabled faster, trustworthy, and more secure transactions.

However, like any new technology, cryptocurrencies are not short of disadvantages. One main disadvantage is their effect on the environment.

This post explores everything you need to know about the environmental impact of mining cryptocurrencies.

Depending on the design of the cryptocurrency, its energy usage can be higher or lower. Bitcoin, which uses the Proof-of-Work standard, uses about half what the global banking sector uses, yet it only has only a fraction of the number of users. The banking industry has 5 or 6 billion people using it wheras Bitcoin is closer to 100 million.

The environmental impact of mining crypto isn’t exactly a positive one, but perhaps it could be.


First of all What is Crypto Mining?

Cryptocurrency mining is the process by which new cryptocurrencies are introduced to the market for circulation. It is also the process by which cryptocurrency networks maintain their security and integrity.

The process used to be easy and less energy-intensive in the beginning, but as crypto gained adoption things began to change.

For example when  Bitcoin was introduced, anyone with a standard computer could mine Bitcoins. The process didn’t demand a whole lot. However, with time more people saw how lucrative this could be, and many of them got on board. This resulted in the activity getting more difficult and energy-intensive.

To put things into perspective, when Bitcoin launched back in 2009 its initial difficulty level was one. By November 2019 its difficulty level was more than 13 trillion.

Today to mine Bitcoin you need sophisticated mining hardware, a good internet connection, and a massive amount of electricity. According to Digiconomist, as of 15th July 2021, it would take 1,721.96 kWh or close to $26,000 to mine a single Bitcoin block.

Currently, the average time for mining one Bitcoin is 10 minutes. However, this applies only to powerful mining machines, like ASIC miners. Considering the difficulty level of mining Bitcoin, with a standard computer it would take you years to mine a single Bitcoin.

An increase in Bitcoin’s mining difficulty increases demand for more mining power. With an increase in mining power, the environment is left to suffer in some ways.

How Much Power does Bitcoin Mining Consume?

According to University of Cambridge researchers, Bitcoin mining consumes around 121.36 terawatt-hours (TWh) per year. This is more than what countries like Argentina (121 TWh), the Netherlands (108.8 TWh), and the United Arab Emirates (113.20 TWh) consume. The amount of Bitcoin mining electricity consumption is expected to increase as its mining difficulty level increases.

According to another report from Galaxy Digital Bitcoin consumes 113 terawatt-hours (TWh) per year. The report goes further to reveal Bitcoin energy consumption might be high but not as high as the banking and gold industry.

The Galaxy Digital report revealed that the banking industry consumes around 263.72 TWh per year while the Gold industry consumes 240.61 TWh per year. When compared, Bitcoin consumes less than half the energy consumed by the banking and gold industry.


How Does Mining Cryptocurrencies Affect the Environment?

There are several:


Excessive use of Electricity

Bitcoin mining’s excessive use of electricity puts its impact on the environment equivalent to countries like Argentina, the Netherlands, and the United Arab Emirates.

Besides mining, according to Statista (2021), one Bitcoin transaction spends on average 1,200.86 kWh, which is equivalent to the electricity used by one U.S. household for over 39.67 days.


Use of fossil fuels

Proponents of cryptocurrencies and cryptocurrency mining will argue that cryptocurrency mining operations increasingly use renewable energy therefore it is safe for the environment. However, according to researchers from Cambridge University cryptocurrency mining still relies heavily on coal-based power.

Cambridge research revealed that around 65% of Bitcoin mining has taken place in China, a country that gets most of its electricity by burning coal. Coal is frowned upon due to its dangerous effects on the environment.

Burning coal produces Sulfur dioxide, which contributes to acid rain and respiratory illness, Nitrogen oxide, which contributes to smog and respiratory illness, Carbon dioxide, mercury, and other heavy metals. In short, coal burning is really bad for the environment and people.

Coal and other fossil fuels continue to be a major source of electricity for Bitcoin mining and other industries as well, because it is cheap. Combined with lax regulations, it is a no brainer to set it up there. The Cambridge Center for Alternative Finance estimates coal accounts for 38% of the amount of energy Bitcoin consumes.

Digiconomist reveals a single Bitcoin transaction has on average a carbon footprint of 818.71 kgCO2, which is equivalent to the carbon footprint of 1,814,550 VISA transactions or 136,452 hours of watching YouTube. As you may imagine, that means the price of bitcoin transactions can be pretty high.

Another report by CNBC states that Bitcoin mining accounts for about 35.95 million tons of carbon dioxide emissions each year. Add the carbon emission of the rest of the supply chain, and you have a serious negative on our hands. This is almost the same as New Zealand, an entire country.


Electronic waste

As crypto mining gets more and more complex, sophisticated mining tools are necessary. Even though you can still mine cryptocurrencies with GPUs and CPUs, to mine the likes of Bitcoin profitably you need specialized mining hardware known as ASICs.

ASICs or Application-Specific Integrated Circuits are crypto mining hardware specially built and designed for fast and efficient crypto mining. One major problem with these circuits is that they cannot be reused for any other purpose. Plus, they quickly become obsolete.

Studies suggest ASICs become obsolete roughly every 1.5 years. Another study by Digiconomist showed that the Bitcoin network generates between eight and twelve thousand tons of electronic waste every year. This is almost similar to an entire mid sized country’s (like Canada) electronic waste output.

Alternatives to Proof of Work

Proof of Work consensus mechanism is why mining Bitcoin and other cryptocurrencies are so energy-intensive. The mechanism requires miners to compete to solve complex computational problems that require a lot of power (as we have already mentioned) to solve. Only the first miner to solve the problem gets the block reward, thus thousands across the world compete for the reward.

The block reward is the incentive for miners of a digital currency. The idea you can make money in the crypto-verse besides trading crypto coins is what has attracted many people to crypto mining. Mining pools and cloud mining have also made it a little easier to mine cryptocurrencies, and that’s why there is a global demand for cheap power, computer hardware, and lax environmental regulations. .

Luckily there are others who want a better, more environmental, cryptocurrency. The environmental disadvantages of the Proof of Work mechanism have caused many others to come up with options. If you want to choose the best, most environmental, cryptocurrency, look for one of the options below.


Proof of Stake

Introduced in 2012, Proof of Stake is a consensus mechanism that was created as an alternative to Proof of Work. Proof of Stake was created to try and solve some of the problems surrounding Proof of work.

Instead of miners, Proof of Stake relies on validators to maintain a specific cryptocurrency.  Validators are crypto users who lock up their cryptocurrencies to secure a blockchain network.

Instead of relying on computing power, Proof of Stake relies on how many coins a validator stakes. The more coins you stake the higher your chances of adding a new block and getting the block reward. The consensus mechanism does away with the need for expensive mining hardware for validation of transactions to create new coins.

Some of the cryptocurrencies using and looking to start using the Proof of Stake consensus algorithm include Ethereum, Tezos, Algorand, Cardano, EOS, and Cosmos.

Proof of Work vs. Proof of Stake

  Proof of Work     Proof of Stake
·         Expensive and energy intensive crypto mining hardware needed for profitable crypto mining ·         No need for expensive and energy intensive crypto mining hardware (energy efficient)
·         Bitcoin Miners compete to solve complex computational problems to add new blocks and get block reward ·         Validators stake their coins to be chosen to add new blocks and get block reward
·         Currently, almost impossible for anyone to mine the coins using the consensus mechanism ·         Anyone with a decent computer, good access to the  internet and electricity, and a good number of coins to stake can add new blocks


Proof of Burn

Proof of Burn is a consensus algorithm that requires miners to burn their cryptocurrencies to be chosen to mine new blocks. The more coins you burn the higher your chances of being selected, getting the block reward in the end.

Miners can choose to burn their network’s native currency or the currency of a different chain like Bitcoin. The idea is to burn as many coins as possible to be able to have a chance to add a new block and get the reward. The reward comes in the form of the native currency of the blockchain.

Proof of Burn has been said to work on a similar platform as Proof of Work. However, it is seen as a better alternative to Proof of Work as it does not require huge amounts of electricity. Slimcoin and Peercoin are some of the cryptocurrencies using the Proof of Burn consensus algorithm.

Proof of Work vs. Proof of Burn

  Proof of Work   Proof of Burn
·         Miners use costly physical mining hardware to validate transactions and add new blocks ·         Miners use virtual mining rigs to validate transactions, less energy needed.
·         Miners compete to solve complex computational problems to mine blocks ·         Miners burn coins to buy virtual mining rigs that enable them mine blocks
·         Miners mining rigs like ASIC miner mine only specific cryptocurrencies like Bitcoin ·         Miners can burn native cryptocurrencies or the currency of an alternate chain to receive block reward


Proof of Elapsed Time

Proof of Elapsed Time is a consensus algorithm often used on permissioned blockchain networks like Hyperledger Fabric, Quorum, Multichain, and Corda. Permissioned blockchain networks are simply private blockchains.

How the consensus works is each participating node on the network is assigned a random amount of time to wait. The first participant to finish waiting gets to commit the next block in the blockchain.

Compared to Proof of Work, Proof of Elapsed Time uses less electricity, which is a plus. On the downside, Proof of Elapsed Time, which is an Intel mechanism, makes use of a third party, which defeats the whole idea of a decentralized system.

Proof of Work vs. Proof of Elapsed Time

Proof of Work   Proof of Elapsed Time
·         Resource intensive crypto mining process ·         Randomized timer system for crypto mining, less energy intensive
·         Suitable for public blockchain networks ·         Perfect for private or permissioned blockchain networks
·         Decentralized consensus mechanism ·         Centralization concerns due to link to Intel


Proof of Authority

Proof of Authority is a consensus algorithm that is almost similar to Proof of Stake. The major difference is Proof of Stake leverages coins while Proof of Authority leverages identity.

First proposed in 2017, Proof of Authority relies on validators staking their identity. Staking your identity means revealing who you are in exchange for the right to validate a block.

Proof of Authority works well for Private blockchains. The consensus algorithm allows companies to maintain their privacy while benefiting from blockchain technology. Microsoft Azure is a good example of where the Proof of Authority consensus algorithm is implemented.

Proof of Work vs. Proof of Authority

  Proof of Work   Proof of Authority
·         Miners with larger computing power mine new blocks ·         Validators stake their identity to mine new blocks, no need for large computing power
·         Miners are not limited to a certain number ·         Small validating group
·         Perfect for public blockchain networks ·         Perfect for private blockchain networks


Proof of Capacity

Proof of Capacity is another consensus mechanism that is a great alternative to Proof of Work in terms of energy efficiency. The algorithm allows mining devices on a blockchain network to use empty space on their hard drive to mine cryptocurrencies.

Proof of Capacity works by generating plots, large data sets, which are stored on the hard drive. The more plots, data sets, stored on your hard drive the better your chances of finding the next block. Burstcoin is one example of a crypto coin utilizing Proof of Capacity.

Listed above are only some of the best alternatives to the Proof of Work consensus mechanism. There are many more being worked on to help solve the energy problem around Proof of work.

Proof of work vs. Proof of Capacity

Proof of Work   Proof of Capacity
·         Mining rigs and computation power needed to verify transactions and add new blocks ·         Hard drive and storage space needed to verify transactions
·         Specialized mining equipment needed for profitability ·         Any hard drive can work
·         Mining hardware like ASIC miner cannot be used for any other purpose besides crypto mining. ·         Hard drive can be wiped out and used for other storage purposes

The Most Environmentally Friendly Cryptocurrencies

Fortunately we have seen more environmentally friendly cryptos enter the crypto market.

Some of them include;



Launched in 2015, Nano is a lightweight and environmentally friendly crypto coin using Delegated Proof of Stake to verify transactions. The crypto coin stands out as it has no mining, minting, or printing.

At the time of writing, Nano is worth $3.69 with a 24-hour trading volume of more than 10 million U.S. dollars. The coin is currently ranked 102 with a live market cap of close to half a billion U.S. dollars.

If you’re looking to invest in Nano it’s available in top cryptocurrency exchanges like Binance, Huobi Global, OKEx, and HitBTC.


Cardano is a proof of stake crypto project that was founded in 2017. The project started in 2015 is as a result of trying to solve some of the problems Ethereum faced with its Proof of Work consensus model.

ADA, Cardano’s token is currently worth $1.17 as per CoinMarketCap. The coin is currently ranked 5th with a live market cap of more than 37 million dollars. Its 24-hour trading volume currently stands at more than seven hundred thousand million dollars.

ADA is a top performer and  currently available on Binance, OKEx, CoinTiger, ZBG, and



Polkadot is a crypto project whose main objective is to tackle one of blockchain’s major problems, interoperability. The project has a native token called DOT, which promotes network governance and operations among other things.

DOT is currently worth $12.04, according to Coinmarketcap, and boasts a 24-hour trading volume of more than half a billion dollars. The coin is currently ranked 9th with a live market cap of more than 11 billion U.S. dollars.

You can buy DOT on almost all crypto exchanges including reputable ones like Binance, Huobi Global, OKEx, and CoinTiger.

Other environmentally friendly cryptos include Stellar (XLM), IOTA, and Chia. As more coins continue to embrace environmentally friendly ways of conducting business more coins are bound to join this list.

Just How Bad is Bitcoin Mining for the Environment?

Some people will say that crypto mining is not as bad as it is made out to be. It is true for example that the impact of crypto mining on the environment is only a fraction of what other industries have already been doing for many years (and are continuing to do).

Furthermore, research shows that most crypto mining firms utilize renewable energy. Therefore, a much smaller impact on the environment is achieved.

Currently there is Bitcoin’s “Green New Deal” put out by crypto proponents who claim that crypto-mining could help the environment by forcing a more efficient allocation of resources.

Opponents of cryptocurrencies say they are a new menace to the environment. It’s not just mining that consumes a lot of power, using them is also expensive. China, once the go-to place for crypto mining, announced stringent moves on crypto mining in 2021.

With the Chinese ban on Bitcoin mining in effect over 90% of its mining capacity is shut down. 90% equates to one-third of the global crypto network’s processing power. Naturally this move means that miners have had to relocate and often to places like the with far higher environmental standards.

All in all the Proof of Work consensus mechanism used by Bitcoin, is not good for the environment.

The problem with proof of work has naturally led to other consensus mechanisms like: Proof of Stake, Proof of Capacity, and Proof of Authority to name a few.

Discussions on the impact of mining on the environment have led to many crypto mining firms switching to renewable sources of energy instead of fossil fuels. This metric should significantly decrease the networks emissions. With cheaper and less energy-intensive ways to mine and run cryptocurrencies already in the works, and miners switching to renewable energy sources, soon such discussions of whether crypto mining is sustainable might be a thing of the past.


Final Word

Bitcoin mining is one of the many ways to earn in the crypto space. However it has come under harsh criticism because of its effect on the environment.

Bitcoin mining does affect the environment but to what extent depends on the type of mining and the environmental regulations of the country where it is taking place.

Fortunately newer and better ways are constantly being introduced.  In the future we can look forward to solutions that are less energy-intensive,  less expensive, and less harmful to the environment.