In a recent commentary, financial economist Alex de Vries has raised concerns about the significant amount of water consumed by cryptocurrency mining, particularly Bitcoin. This extensive water usage poses a threat to the global water supply, especially in water-scarce regions.

Bitcoin’s water consumption

De Vries, a PhD student at Vrije Universiteit Amsterdam, highlights the burgeoning issue of Bitcoin’s water footprint. “Many parts of the world are experiencing droughts, and fresh water is becoming an increasing scarce resource,” says de Vries (@Digiconomist). “If we continue to use this valuable resource for making useless computations, I think that reality is really painful.”

Historically, the focus on cryptocurrency’s environmental impact centered around its electricity consumption. Miners around the world actively compete to solve mathematical equations on the internet when mining Bitcoins, the most popular cryptocurrency. The winners receive a share of Bitcoin’s value.

“The right answer emerges every 10 minutes, and the rest of the data, quintillions of them, are computations that serve no further purpose and are therefore immediately discarded,” de Vries says.

In the Bitcoin network, miners collectively generate about 350 quintillion guesses every second of the day, equating to 350 followed by 18 zeros. This process consumes a tremendous amount of computing power.

Quantifying the impact

During the mining process, large data centers use a significant amount of water to cool their computers. Alex de Vries, drawing on previous research data, estimates that Bitcoin mining in the U.S. consumes about 8.6 to 35.1 gigaliters (GL) of water annually from data centers.

Additionally, coal- and gas-fired power plants, which supply the electricity for these computers, also utilize water to cool down. This water, once used for cooling, evaporates and becomes unavailable for reuse. Similarly, water that evaporates from hydropower plants contributes to the overall water footprint of Bitcoin’s power requirements.

De Vries estimates that Bitcoin mining used over 1,600 gigaliters (GL) of water globally in 2021. On average, each transaction on the Bitcoin blockchain consumes 16,000 liters of water, which is about 6.2 million times more than a credit card swipe, or sufficient to fill a backyard swimming pool. De Vries predicts that Bitcoin’s water consumption will rise to 2,300 GL by 2023.

“The price of Bitcoin just increased recently and reached its highest point of the year, despite the recent collapse of several cryptocurrency platforms. This will have serious consequences, because the higher the price, the higher the environmental impact,” de Vries explains.

The environmental toll is exacerbated by the fact that these resources are not utilized for productive purposes like artificial intelligence but are instead expended on “useless computations.”

Regional implications

Countries like Kazakhstan, a major hub for cryptocurrency mining, are already facing water shortages. In 2021, Bitcoin transactions in Kazakhstan accounted for 997.9 GL of water, adding to the country’s water crisis.

In the U.S., the annual water consumption for Bitcoin mining, from all sources combined, ranges between 93 GL to 120 GL. This is equivalent to the water usage of 300,000 American households or a city like Washington, D.C.

de Vries says. “The most painful thing about cryptocurrency mining is that it uses so much computational power and so much resources, but these resources are not going into creating some kind of model, like artificial intelligence, that you can then use for something else. It’s just making useless computations.”

Addressing the challenge

De Vries suggests potential solutions, such as modifying Bitcoin mining’s software to reduce power and water requirements. He also proposes incorporating renewable energy sources like wind and solar to lessen the water footprint. However, he cautions against diverting limited renewable resources to cryptocurrency mining at the expense of other essential uses.

“But do you really want to spend wind and solar power for crypto? In many countries including the U.S., the amount of renewable energy is limited. Sure you can move some of these renewable energy sources to crypto, but that means something else will be powered with fossil fuels. I’m not sure how much you gain,” he says.

Water, Bitcoin, and the future

As Bitcoin’s value continues to grow, so does its environmental footprint. De Vries predicts that Bitcoin’s water consumption will increase to 2,300 GL by 2023. This growing demand for water in the mining process could further exacerbate the global water crisis, especially in drought-prone areas.

In summary, the revelation of Bitcoin’s significant water footprint by Alex de Vries serves as a wake-up call to the environmental implications of cryptocurrency mining. As the world grapples with water scarcity, the need for sustainable and responsible use of resources becomes more pressing.

De Vries’s research underscores the importance of reassessing the environmental costs of emerging technologies like Bitcoin and seeking solutions that align with global sustainability goals.

The full study was published in the journal Cell Reports Sustainability.

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