Bitcoin environmental impacts : narrative literature review

Abstract

Following the recent interest in cryptocurrency markets and talks about its sustainability, this thesis aimed to review the current state of Bitcoin mining and how it is affecting the environment. Cryptocurrency mining consumes huge amounts of energy each year, comparable to amounts spent by entire countries, with Bitcoin having the largest energy demand. Most of this energy is currently being wasted as many blockchains use a validation method that has every miner compete for a reward, but only one person receives it. Everyone else working to get the reward ends up wasting the energy they dedicated to it.

Many of the existing studies focus mostly on Bitcoin’s carbon footprint and this thesis attempted to compile all the different ways environment is impacted by Bitcoin mining and what the reasons for that are. Secondary objective was to examine how mining is likely to develop and solutions that could be implemented to reduce the effects on the environment in the future. Cryptocurrency is a new subject and most of the up-to-date information is found online. This is why this thesis used online sources when physical books were not available and it was necessary to evaluate the reliability of each new piece of information. Information was gathered from primary data sources where possible to try and preserve the accuracy of the information. There is need to further study the ways to make Bitcoin mining more efficient and how to make better use of the heat energy that currently mostly goes to waste.