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Clamping down on Bitcoin’s thirst for energy

Published online 29 August 2018

A law professor in Qatar proposes solutions to alleviate Bitcoin’s negative impact on the environment.

Louise Sarant

In one year, Bitcoin has used twice as much electricity as Qatar. This huge reliance on energy, and the associated emission of greenhouse gasses, is currently overwhelmingly unregulated. “We could be at a serious risk of missing the Paris Agreement targets, and of causing ourselves immense climate change problems,” says Jon Truby, director of the Center for Law & Development at Qatar University’s College of Law. 

In a study published in Energy Research & Social Sciences, Truby explores the potential financial and legal options available to policymakers to stymie the growing energy dependence of the world’s leading cryptocurrency. 

Bitcoins are mined by solving incredibly complex mathematical puzzles using special computing hardware. Miners compete to solve the puzzles and release bitcoins into circulation. The ‘blockchain’ technology underlying this process is intentionally designed to require high energy consumption to make mining more difficult and bitcoins more valuable with time. Bitcoin transactions are registered in a public ledger within the blockchain technology, with transactions verified by the hardware used by miners. 

Digiconomist, a platform that provides in-depth analyses on cryptocurrencies, estimates that one Bitcoin transaction uses 1,000 kilowatt-hours of electricity: the amount of power used by four Egyptian households in a month, and needed to perform 100,000 Visa transactions. Since 200,000 Bitcoin transactions are processed every single day, Digiconomist estimates that the cryptocurrency consumed 73 terawatt-hours of electrical energy in the past year, which equals Chile’s annual electricity needs, and is double that of Qatar’s. 

Since a chunk of this electricity is coal-based, the Bitcoin network could severely hamper the international community’s chances of decelerating global warming and enforcing the Paris Agreement. While countries have pledged to direct global finance flows to enable low greenhouse gas emissions, Bitcoin and its massive reliance on energy goes against the spirit of the Agreement, writes Truby. “Although hydroelectricity is partially used to power Bitcoin transactions, Chinese [Bitcoin] miners are still overwhelmingly reliant upon coal, gas and oil,” he says, emphasizing that 60% of all Bitcoin mining is done from there.

“This is a billion-dollar industry that’s causing a lot of pollution. Why are we not doing anything about it?” he asks.

To counter this, Truby lays out in his paper multiple regulatory and fiscal options that could lead to the emergence of increasingly sustainable digital currencies and other applications of blockchain technology; a challenge, given their decentralized, global and peer-to-peer nature.

Bitcoin uses an energy-intensive security protocol called ‘proof-of-work’ to validate transactions between users, which relies on mining hardware that functions 24/7. While more miners mean higher electricity use, it is also synonymous with greater security levels for the general Bitcoin framework, since miners are the ones in charge of approving Bitcoin transactions on the network. 

“Alternatives exist,” Truby says, referring to ‘proof-of-stake’, a system where a person can mine or validate a transaction according to how many bitcoins she or he holds, rather than how much work and energy went into solving a puzzle. Out of the 1,500+ cryptocurrencies that exist, only Peercoin has adopted this system so far, and Ethereum is debating switching to proof-of-stake in the near future.

Truby also recommends introducing registration fees collected by brokers from digital coin buyers and imposing green taxes on mining device imports and purchases. The tax would be higher for digital currencies mined with dirty fuels, and closer to zero for the low emission coins. As a result, there would be an incentive for buyers to purchase ‘clean’ digital coins. This move should also encourage miners to switch to less-polluting mining devices, and prompt mining hardware manufacturers to increasingly produce energy-saving devices. In turn, digital currency developers, who design the various digital currency codes, would be influenced to adopt low-emission protocols.


“I want to encourage developers to think about the environmental impacts when they develop new technologies,” says Truby.


Alex de Vries, founder of Digiconomist and blockchain technology expert, explains that actions can be taken since mining takes place in physical locations. “However, I’m also considering the potential waterbed effect where miners will simply move to more mining-friendly locations,” says De Vries, who wasn’t involved in the study. He adds that however difficult it might be to coordinate global measures, it is necessary nonetheless, since mining can be done from any location.


Truby, J. Decarbonizing Bitcoin: Law and policy choices for reducing the energy consumption of Blockchain technologies and digital currencies. Energy Res. Soc. Sci. (2018).