Beyond Bitcoin: Evaluating Energy Consumption and Environmental Impact across Cryptocurrency Projects

Abstract

Since their inception with Bitcoin in the late 2000s, cryptocurrencies have grown exponentially, reshaping traditional financial paradigms. This transformative journey, while innovative, brings forth pressing concerns about their energy consumption and carbon footprint. While many studies tend to zoom in on Bitcoin, this paper broadens the perspective by evaluating energy consumption across various cryptocurrencies. We analyze nine cryptocurrency projects, chosen for their market value, technology, and data availability. These span a spectrum from pioneering to emerging digital coins, offering a holistic view of the crypto realm. To contextualize, we juxtapose the energy usage of these digital currencies with traditional payment means like Visa and Mastercard. Our analysis shows vast differences in energy use among cryptocurrencies, largely tied to their consensus algorithms. Notably, while Bitcoin stands out as highly energy-intensive, several newer digital currencies have energy footprints mirroring those of conventional payment methods. Additionally, CO2 emissions estimation presents challenges due to variances in miner locations and regional energy sources, with potential higher emissions if concentrated in carbon-intensive regions like China. Nonetheless, the silver lining emerges as many cryptocurrencies, especially those beyond Bitcoin, register considerably lower CO2 emissions. By moving the lens beyond Bitcoin, this paper paints a more nuanced picture of the environmental ramifications of the crypto world.