One bitcoin transaction generates 272 grams of e-waste, according to new research.
Alex de Vries, the founder of financial analysis platform Digiconomist, and researcher at MIT’s Center for Energy and Environmental Policy Research Christian Stoll, say that the waste from crypto transactions is comparable to the small IT equipment waste produced by countries such as the Netherlands.
Over the course of 2019, the bitcoin network processed 120 million transactions, while traditional payment service providers processed about 539 billion transactions.
“Bitcoin’s annual e-waste generation adds up to 30.7 metric kilotons as of May 2021” the researcher’s claim, which could increase to 64.4 metric kilotons of waste at the peak price levels seen earlier this year.
They go on to say that the demand for mining hardware has been disrupting the semiconductor supply chain, which is currently suffering a global shortage due to increased need in the coronavirus pandemic, as well as a US-China trade war and a drought in Taiwan.
Another issue is the use of ASIC chips, which are specifically designed to mine crypto transactions and have made CPUs and GPUs obsolete; however, as technology develops, these single-purpose ASIC chips quickly become waste themselves as miners demand increasingly faster machines.
“The lifespan of Bitcoin mining devices remains limited to just 1.29 years”, the research estimates.
These issues are likely to only increase as time goes on, unless the bitcoin mining process is replaced “its entirety with a more sustainable alternative”.
One of those alternatives is “proof of stake” instead of “proof of work”, a process used to validate transactions.
“The first miner who finds a PoW [proof of work] that satisfies predetermined conditions broadcasts the block to all nodes in the network. The receiving nodes express their acceptance of the new block by building on top of it”, the paper explains.
Miners’ “proof of work” calculations requires huge amounts of energy to collect crypto currency, but “proof of stake” requires significantly less.
The Ethereum blockchain, which powers the ether currency as well as other technologies like non-fungible tokens (NFTs), is making a transition to “proof of stake” technology – although the change has not yet happened.
Such a transition is inherently necessary, de Vries told The Independent. “You can power this network with 100 per cent renewables (which I don’t think is realistic, but let’s assume so purely theoretically), but you’d still be left with this pile of electronic waste leaving an unsustainable situation. There’s just no real fix for that.”
He continued that it would be “technically possible to replace the proof-of-work mining in Bitcoin with a more sustainable alternative like Ethereum is planning to do (and many others have already done). If that ever happens in Bitcoin then even this currency could actually become sustainable, but currently nobody in Bitcoin is working on this.”
Ethereum currently consumes as much energy as a mid-sized country, a requirement to keep the network safe from malicious users. Unfortunately, that blockchain is powered by fossil fuels, contributing to climate change.
Analysis by the University of Cambridge suggests the bitcoin network uses more than 121 terawatt-hours (TWh) annually, which would rank it in the top 30 electricity consumers worldwide if it were a country.
“Bitcoin’s energy consumption has more than quadrupled since the beginning of its last peak in 2017 and it is set to get worse because energy inefficiency is built into bitcoin’s DNA,” Charles Hoskinson, CEO of leading cryptography firm IOHK, told The Independent.