Bitcoin, the world’s most popular cryptocurrency, has been facing criticism for its energy consumption. However, a new study by Alex De Vries, a well-known Bitcoin critic, brings attention to another environmental concern – water usage. According to De Vries, each transaction on the Bitcoin network uses about 16,000 liters of water, equivalent to filling a pool. This claim has sparked diverse reactions within the community.
Bitcoin’s Growing Water Footprint
De Vries’ study, released on November 29, highlights the increasing water footprint of Bitcoin. Despite its already high energy usage, Bitcoin’s water usage has been on the rise. The report reveals that the network’s water footprint grew by 166% in 2021 compared to the previous year. In 2021 alone, the water footprint reached 1,573.7 gigaliters (GL), whereas it was only 591.2 GL in 2020.
The surge in water usage can be attributed to a combination of cooling systems and indirect sources. To address this environmental issue, potential solutions such as immersion cooling and alternative water sources that do not rely on fresh water are being suggested. Additionally, a change in network software could further mitigate the water footprint of Bitcoin.
Reactions and Impact on the Industry
The claims made by De Vries have received mixed reactions. While pro-Bitcoin commentators have pushed back against his findings, some analysts have expressed support. The study’s conclusions could potentially lead to tighter regulations on Bitcoin mining, impacting the industry negatively.
However, it’s important to note that there are critics of De Vries’ work who believe his comparisons are unfair. He has previously compared Bitcoin transactions to “808,554 Visa transactions or 60,802 hours of watching YouTube.” Nevertheless, experts from the Cambridge University Center for Alternative Finance argue that transaction throughput is unrelated to electricity consumption, and increasing mining equipment won’t have an impact on the number of processed transactions.
Furthermore, it is worth mentioning that De Vries’ affiliation with the Dutch central bank and his reputation as a long-standing Bitcoin critic have raised doubts about the accuracy and objectivity of his statements.
Amidst growing concerns over Bitcoin’s energy consumption, regulators worldwide have started taking action. China has already banned digital asset mining activities due to climate concerns, and other countries are following suit. Kazakhstan has reduced the supply of electricity to Bitcoin miners, while the White House has proposed imposing a 30% tax on cryptocurrency mining. These developments further highlight the need for the cryptocurrency industry to address its environmental impact.
