Africa is emerging as the “new frontier” for Bitcoin, with the increased regulation in other nations driving its development across the Global South. The Central African Republic made it an official currency last year, and it’s taking off in Nigeria, Ghana, and beyond.
But a new United Nations-affiliated report warns of the environmental impacts with a look across 76 nations and the impact on energy, water and other resources. The results, they say, are shocking.
“Technological innovations are often associated with unintended consequences and Bitcoin is no exception,” said Dr. Kaveh Madani, director of the United Nations University Institute for Water, Environment and Health (UNU-INWEH).
“Our findings should not discourage the use of digital currencies. Instead, they should encourage us to invest in regulatory interventions and technological advancements that improve the efficiency of the global financial system without harming the environment.”
During the study period of 2020-2021, the water use associated with global Bitcoin mining was more than the total of 300 million people living in rural sub-Saharan Africa. The energy consumption, if Bitcoin were a nation, would rank it as 27th in the world, far ahead of many African countries.
“The global Bitcoin mining network consumed 173.42 terawatt hours of electricity,” the paper said. “The resulting carbon footprint was equivalent to that of burning 84 billion pounds of coal or operating 190 natural gas-fired power plants.” An offset in trees would equal 7% of the Amazon rainforest.
Coal accounts for 45% of Bitcoin’s energy supply mix, with natural gas at 21%. Hydropower, a renewable energy source with significant water and environmental impacts, provides 16% of electricity demand.
No African country currently breaks the Top 10 in Bitcoin-related resources, but there already is significant water impact in Ethiopia, Egypt and Angola.
“Because countries use different sources of energy to generate electricity, their electricity production impacts on climate, water, and land are not the same,” said Dr. Sanaz Chamanara, the lead author of the study.
The UN scientists suggest investment in other, more efficient digital currencies is less harmful to the environment. They also call for social justice on the issue.
“When you note which groups are currently benefiting from mining Bitcoin and which nations and generations will suffer the most from its environmental consequences, you can’t stop thinking about the inequity and injustice implications of the unregulated digital currency sector,” said Madani.