Bitco's growth can be catastrophic to the environment

Bitcoin's phenomenal growth this year could make very rich speculators, but some observers say it's terrible for the environment.

First known as a dark field for criminals, Bitcoin has begun to attract important investors. Its price has increased from less than 1,000 dollars at the beginning of the year to over $17,000 on Thursday.

Critics say the cryptovaluta is a “device” and they warn of a bubble. Environmentalists worry about another danger that it is seriously damaging efforts to fight climate change.

“Bitcoin is slowing down efforts to reach a rapid passage away from fossil fuels”, meteorologist Eric Holthaus wrote in an article in the environmental newspaper Grist this week.

Unlike dollars or pounds, these “virtual currency” are not connected to a central bank. Instead, Bitcoins are “named” from computers in large data centres that store large amounts of energy.

Bitcoin uses about 32 terawattts of energy annually, enough to empower about three million American families, according to the Bitcoin Energy Consumer Index published by Digiconomist, a Web site focused on digital coins.

By comparison, the processing of billions of Visa transactions (V) that occur annually consumes the same amount of energy as only 50,000 American homes, according to Digiconomist.

More disturbing, Bitcoin's energy demands will explode.

“As bitcoin grows, math problems that need to be solved to do more bitcoin are becoming increasingly difficult”, which means more processing power is needed, says Holthaus.

And he made a surprising prediction: Without a significant change in how transactions are processed, Bitcoin can consume enough electricity to supply the US in mid-2019.

Six months later, this requirement could be equal to energy consumption in the world.

The fact that much of the bitumen is mined in China is also fuelling environmental concerns.

The remote areas of the country have experienced withdrawals for data centres that require bitcoin minimide because nuclear subx0> and land are very cheap”, the researcher at Cambridge University wrote in a recent study.

Much of the energy in provincial China comes from non-efficial, coal-based plants that are built pending major construction projects that have never occurred, according to researchers.

Digiconomist reported that the energy requirements for a bitcoin mine he visited in domestic Mongolia were equivalent to those of a Boeing 747 flight.

The large bitcoin miners have defended their operations, telling Cambridge researchers that they believe their environmental impact is insensitive compared to that of extracting natural resources like oil.

And the most eco-friendly energy resources are being approved. For example, Vienna-based Hydro Miner uses renewable hydroelectric energy for its bitcoin operations

But some experts are very pessimistic about the future.

Chicago and Chicago Mercantile Exchange's board of options will allow investors to start betting for the upcoming Bitcoin award later this month.

This is expected to spur a great interest on large, professional money managers who have so far stood on the side of the Bitcoin party. More demand for the digital currency is likely to boost the use of even higher energy.

“CME's future could institutionalise bitcoin, which would be disastrous [for the environment],” said John Quiggin, an economics professor at Queensland University.

Quiggin believes that policymakers will not be able to ignore the consequences for long.

“Something must be done soon,” he said./ CNN