Every Bitcoin payment 'uses a swimming pool of water

The news article titled 'Every Bitcoin payment uses a swimming pool of water' discusses the environmental impact of Bitcoin transactions. According to a study conducted by Alex de Vries of Vrije Universiteit Amsterdam, each Bitcoin transaction consumes an average amount of water equivalent to filling a backyard swimming pool. This is approximately six million times more than the water used in a typical credit card transaction. The high water consumption is attributed to the cooling and powering of the millions of computers globally that Bitcoin relies on. This revelation comes at a time when many regions are grappling with fresh water shortages.

The study highlights that up to three billion people worldwide are already experiencing water shortages, a situation projected to worsen in the coming decades. This is a prevalent issue in Central Asia and the US, particularly in California, and is expected to intensify as climate change progresses. In 2021, Bitcoin consumed nearly 1,600 billion litres of water, and the study predicts that this figure could exceed 2,200 billion litres by 2023. The primary reason for Bitcoin's high water consumption is its reliance on massive computing power, which necessitates substantial amounts of electricity. In fact, Bitcoin's power consumption is only slightly less than that of the entire country of Poland.

Water is used to cool the gas and coal-fired plants that generate much of our electricity. Large quantities of water are also lost through evaporation from the reservoirs that supply hydroelectric plants. Additionally, water is used to cool the millions of computers worldwide that facilitate Bitcoin transactions. Mr de Vries argues that Bitcoin's water consumption could be significantly reduced by altering the power-intensive process at its core, known as 'Bitcoin mining'. This process involves miners auditing transactions in exchange for a chance to earn the digital currency. However, they compete against each other to complete the audit first, resulting in the same transaction being processed multiple times by numerous powerful computers. A potential solution to reduce Bitcoin's electricity and water consumption could be a change in its operational method, similar to what the major cryptocurrency Ethereum did in September 2022. Ethereum transitioned to a system called 'proof of stake', which reduced its power use by over 99%. However, implementing this change for Bitcoin may not be straightforward, as Prof James Davenport from the University of Bath points out that Ethereum's management is significantly more centralised than Bitcoin's. Despite these challenges, the study's findings have raised concerns among experts. Dr Larisa Yarovaya, an associate professor of finance at the University of Southampton, emphasises that the use of freshwater for Bitcoin mining, particularly in regions already grappling with water scarcity, should be a cause for concern among regulators and the public.