Bitcoin and climate change

have we created a monstrosity?

Published in El Pais, 23 January 2021.

Is Bitcoin the future or is the crypto currency threatening it? Bitcoins are a reward for computing capacity that contributes to the development and maintenance of the blockchain. Blockchain is a chain of blocks of information that provides insight into the status of processes in progress. The computing power of participating computers and data centers is used to guarantee the correctness and completeness of the status in the chain. Such a chain of information can relate to the transfer of money or the status and location of ordered goods. Trust is out. We want proof and guarantees and blockchain offers that, is the assumption.

All changes to blockchain must be validated by computing power from computers. And that takes a lot of electricity. Estimates assume an annual energy consumption for the Bitcoin blockchain of 120 billion kWh. That is what energy is consumed in the Netherlands in a year and twelve times the consumption in Bolivia. Much energy is generated by coal and gas power plants and by nuclear power plants. These forms of energy production are controversial. Coal and gas-fired power stations, for example, emit harmful substances. While a large part of the world committed itself in the Paris climate agreement to a brake on global warming through CO2 reduction, many CO2-reducing measures are being nullified by the blockchain development.

Other crypto coins such as Ripple and Ether (Ethereum) have their own blockchain, with associated energy consumption. Yet crypto coins and blockchain are a trend that even asset managers are following. For example, asset manager Jefferies has decided to convert 5% of their investments in gold to Bitcoin. Are they blinded by the rise in value of Bitcoin and are they ignoring the adverse effects of this energy-guzzling sector on the climate?

Asset managers want to invest in accordance with ESG criteria. Money is only invested in companies and sectors that are responsible for Environmental (environment), Social (social) and Governance (governance). How strange is it then that more money is invested in blockchain and crypto coins that are responsible for so much CO2 emissions?

It is true that Ethereum wants to make their blockchain more energy-efficient by no longer having all computers and data centers validate blockchain changes, but is that not at the expense of the promised guarantees and do we not fall back on trust? Will we soon have blockchain that does not do what they promise, and have we created a monstrosity that accelerates climate change?

About Martijn Borst 18 Articles
Martijn Borst is Dutch and has a BSc in Finanzes and Control. He worked many years as corporate accountant. Lately he is active as a volunteer in the field of welfare and development.


  1. It is true that cryptocurrencies that use proof of work (such as Bitcoin) use a lot of energy, however the emergence of coins using the proof of stake consensus (where users mine using their existing coins instead of computing power) drastically lowers the energy consumption of the blockchain. Ethereum is making the move to this method while popular projects like Cardano launched their staking network this past August. It is true the rising price of Bitcoin will continue to attract investment into expensive mining hardware but as cryptocurrency becomes more mainstream we will see lots of opportunities to invest in more eco friendly projects.

    • I fully agree that the change to prove of stake by crypto’s like Ethereum drastically lowers the energy consumption of the blockchain.
      However, it takes more time then initially thought by Vitalik Buterin (Ethereum’s founder). Buterin already planned for POS in 2015 when I’m correct. By the end of 2019 POS should have been introduced, but that was delayed by a whole year. In the meantime of lot of energy was wasted, as this was not available for industry or households. And already from 2015 on the Paris climate agreement was founded with it’s goals and promises. Furthermore Ethereum’s POS does not convince me at this moment that it is 100% trustworthy. It is stated that fraud will be traced, but I cannot find protocols about this, which I understand and do convince me.
      And then there still is that very popular bitcoin, using proof of work. The chance exists that more and more investors will get convinced by Ethereum and will dump bitcoin. Then all it’s energy used to built bitcoin’s blockchain is wasted and the value of btc will implode. What will that do to cryptocurrencies image?
      Offcourse I do support your wish that more new opportunities will develop to invest in more eco friendly projects.

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