IN a dynamic shift, Africa is witnessing the meteoric rise of Bitcoin, often hailed as the ‘new frontier’ for the cryptocurrency. The region’s increased embrace of Bitcoin comes against the backdrop of stringent regulations in various nations worldwide, propelling its development across the Global South. Notably, the Central African Republic formalised Bitcoin as an official currency last year, marking the start of its burgeoning acceptance in countries like Nigeria, Ghana, and beyond.
However, a recently released United Nations affiliated report has sounded the alarm on the environmental toll of Bitcoin’s proliferation. The report, spanning analysis across 76 nations, sheds light on the distressing impact on essential resources such as energy, water, and the environment. Dr Kaveh Madani, director of the United Nations University Institute for Water, Environment, and Health (UNU-INWEH), cautioned, ‘Technological innovations, including Bitcoin, come with unintended consequences. Our findings reveal shocking revelations.’
During the study period from 2020 to 2021, the study found that the water usage linked to global Bitcoin mining surpassed the total consumption of 300 million people residing in rural sub-Saharan Africa. The energy consumption attributed to Bitcoin, if quantified as a nation, would rank it as the 27th largest energy consumer globally, significantly surpassing the usage of many African countries.
Detailing the stark environmental toll, the report highlighted that the global Bitcoin mining network consumed a staggering 173.42 terawatt hours of electricity. The resulting carbon footprint equated to burning 84 billion pounds of coal or running 190 natural gas-fired power plants, with an offset in trees equivalent to 7 percent of the Amazon rainforest.
Of concern is the energy supply mix used in Bitcoin mining, where coal accounts for 45 percent of its energy source, followed by natural gas at 21 percent. Moreover, renewable energy sources, notably hydropower, contribute to 16 percent of Bitcoin’s electricity demand but come with their own significant environmental impacts.
Although no African country presently ranks among the top 10 in Bitcoin-related resource consumption, nations such as Ethiopia, Egypt, and Angola have begun experiencing considerable water impacts.
Dr Sanaz Chamanara, the lead author of the study, stressed the varying impacts across countries due to differences in energy sources. ‘The way nations generate electricity has diverse implications on climate, water, and land,’ Chamanara said.
The UN scientists advocate for investment in more eco-friendly digital currencies and stress the urgent need for social justice in addressing this issue. Dr Madani highlighted the disparities, noting, ‘The unregulated digital currency sector raises concerns about inequity and injustice, evident in who benefits from Bitcoin mining and which nations and generations will bear the brunt of its environmental consequences.’
The report’s recommendations emphasise the necessity of regulatory interventions and a transition to greener digital currencies to preserve the environment while ensuring a more equitable digital landscape.