Why you should care about the environmental impact of Bitcoin — and how to fix it

Kash Team
5 min readJul 6, 2021

Bitcoin’s heavy energy usage has been debated by everyone from Elon Musk to Ethereum and China to CNBC lately. What is everyone worried about and is there some truth to what they are saying?

You might have seen Elon’s tweets announcing the suspension of bitcoin as a payment method for Tesla over environmental concerns, which is understandable considering the green values Tesla represents. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said in May.

Bitcoin Consumes 3.88x More Energy Than 8.4 Million People In New York City

How much energy is Bitcoin actually using? Bitcoin’s energy intensive network ranks in the top 30 countries for worldwide energy usage. According to Digiconomist’s Bitcoin Energy Consumption Index, 131.2 TWh (Bitcoin’s yearly energy usage at the time of writing this article) can power countries with populations in the tens of millions and it is comparable to the power consumption of Argentina at 131.91 TWh. For some more comparison, the United Arab Emirates stands at 121.84 TWh and Netherlands at 109.29 TWh per year.

How much electricity does an average American home consume? In 2019, the average annual electricity consumption for a U.S. residential utility customer was 10,649 kilowatt hours (kWh). We know the total power consumption of BTC is about 131.2 TWh (131.2 Billion Kwh); according to these statistics, Bitcoin can power a total of 12,319,248 households. That is enough to power 3.88 times the size of New York City’s entire household population, or 93% of the state of California’s entire residential population.

Bitcoin produces 62 megatons of carbon emission yearly which is comparable to the carbon footprint of Belarus. This is not going to stay like this forever though, as Bitcoin goes up in price the miner incentives are also increasing, resulting in increased energy consumption. Another problem is that much of the mining is located in China, and relies heavily on coal. China has been shutting down cryptocurrency mining operations due to concerns over energy consumption.

It is true that Bitcoin has been a big polluter, and it is only one out of thousands of ever growing cryptocurrencies. Can our environment really tolerate all of this at this rate? The answer is no. We are already battling with climate change, as it is. The cryptocurrency revolution has to be more sustainable both for the sake of itself and our planet. Even though some miners argue that they are mining with renewable energy to power their bitcoin farms, that energy could still be cut drastically and be used for powering homes or factories as a clean power alternative…

An environmentally sustainable revolution

There are only two solutions to the environmental crisis cryptocurrency revolution is bringing. To understand these solutions, let’s first look at why this is all happening in the first place. Bitcoin and most other cryptocurrencies have been using a concept called ‘Proof Of Work’ (PoW) to verify every transaction. This system requires computers to solve complex math problems. As the network is growing, the complexity of tasks are getting bigger, and naturally more and more power is needed to solve the tasks. On top of this, many different competitors race to solve the current task the fastest, because only the fastest computer certifies the transaction and is rewarded along the hundreds of computers racing to solve the same exact mathematical problem. This means 99% of all the energy going into one transaction is essentially wasted energy.

One solution is partial centralization. All of the trouble the proof systems go through is to be able to verify the transactions in a decentralized manner. Some argue a centralized authority to produce the coins algorithmically would reduce the energy waste. For example, some cryptos have introduced a concept called pre-mining which requires a central authority to create a set amount of blockchain based tokens before it is launched to the public. Many object to the idea of partial centralization in the long run, wanting to keep the blockchain technology fully decentralized.

The other solution is switching to Proof Of Stake (PoS) mining and using renewable energy. Proof Of Stake system essentially eliminates the competitive computing process of the Proof Of Work system while still keeping everything decentralized (even more decentralized than PoW). It lets each computer in the system work on one task at a time. The Proof Of Stake system requires validators/miners to put in some amount of cryptocurrency as collateral, called ‘stake’. In return, the algorithm periodically lets one of the validators create the next block in the blockchain. This dramatically reduces the energy usage compared to the Proof Of Work system, since there is no racing to solve complex mathematical problems.

Switching to PoS systems

Ethereum, the second biggest crypto asset, is moving to PoS consensus mechanism from PoW. By switching to PoS consensus mechanism as Ethereum’s number 1 priority, Ethereum founder Vitalik Buterin plans to cut energy consumption by 99% which is a huge number, and a big win for sustainability. This switch will also improve their network speed and scalability.

Building a better future with PoS

Terra — a Planet-Friendly Blockchain: In ancient Roman religion and myth, Terra Mater (“Mother Earth”) is the goddess of the earth. In the blockchain world Terra is also a more planet friendly blockchain. Terra Ecosystem runs on Proof Of Stake consensus mechanism and consumes less energy throughout the entire year than bitcoin produces in a day.

Kash — a Planet-Friendly Neo-Banking System: Kash decentralized neo-banking system, which lets you earn interest rates up to 20%, is built upon the Terra Ecosystem. It is a revolutionary way of earning interest on your capital without having to lend your money to a centralized system like a traditional bank. Kash lets anyone participate in the blockchain validation system and it also lets people reap the benefits of the blockchain technology without the risk of volatility. As more and more people participate, it will improve the scalability of blockchain technology.

Kash provides more financial opportunities than a traditional bank with its Checking, Savings and Investment accounts and Kash bank card powered by stable coins which remove geographical boundaries, letting people send money in a faster and cheaper way, and letting people from all around the world invest in crypto assets, stocks and commodities.

While keeping the blockchain networks eco-friendly, Kash also aims to solve the two biggest financial constraints of the world. Kash aims to bring better financial opportunities to developed economies with low interest rates with its (up to) 20% interest rate. Kash also aims to solve the high inflation and fiat money deflation problem in struggling economies with its stable coins, making saving more profitable. To learn more, and create your free Kash account please visit Kash.

Revolutions as big as this need to be thoroughly thought out. We can not let blockchain technology become just another system that does not care about its impact on the environment. We have a huge opportunity now to shape the system in a way we all want, to create the world we all want to live in. At the end of the day, all of this is built by the people, for the people…



Kash Team

We're Kash.io, the very first third party ecosystem partner invested by Terraform Capital. We're excited to be bringing the Anchor Protocol mainstream.