Did you know?
The Bitcoin network does not just have an energy problem, but also generates significant quantities of electronic waste (e-waste). The reason for this is that Bitcoin mining is done with specialized (singular purpose) hardware, which becomes obsolete roughly every 1.5 years. This problem was defined for the first time ever in the paper titled “Renewable Energy Will Not Solve Bitcoin’s Sustainability Problem“. The Bitcoin E-waste Monitor was created to provide insight into the amount of e-waste generated by the Bitcoin network.
How does Bitcoin generate electronic waste?
Within the Bitcoin network, all of the participating mining machines are competing with each other for the reward of generating a new block for Bitcoin’s underlying blockchain. The chance of creating a new block for the blockchain is proportional to one’s share of the total computational power. In such an environment, miners can only compete in terms of cost efficiency. Mining machines require energy for the task of generating hashes. Therefore the efficiency of this hardware is determined by the amount of electricity required to complete a certain amount of computations. The more computations per unit of energy, the more profitable a machine can be. This has caused a rat race to develop more efficient mining hardware.
History of mining equipment
Bitcoin mining was initially done using the central processing units (CPUs) of hardware. By the end of Bitcoin’s first year (2009), it was realized that mining could also be done using graphic processing units (GPUs). GPUs mine Bitcoin faster than CPUs. Not too long after (2011), miners started to shift to field programmable gate arrays (FPGAs). And in 2013, miners started using application-specific integrated circuits (ASICs) for mining Bitcoins. As implied by the name, ASIC chips are hardwired to perform one type of calculation only (unlike FPGAs which can be reprogrammed to mine anything). This ensures that all resources are optimized for the task of generating hashes.
Continuous increasing efficiency
In general, we can expect mining equipment to become obsolete in roughly 1.5 years. This would follow from Koomey’s law, and the observation that only the most cost-efficient machines can remain economically viable for mining. Koomey observed that “the electrical efficiency of computing (the number of computations that can be completed per kilowatt-hour of electricity)” has “doubled about every 1.5 years” over a period of 65 years. The developments in Bitcoin ASIC mining equipment have easily kept up with this pace.
Turning to waste
Continuous increasing energy (cost) efficiency of these newer iterations of mining devices ensures that older ones will inevitably become obsolete on a regular basis. Less efficient mining devices will be always be pressured out of the market sooner or later, as they simply cannot compete with newer (more cost efficient) machines. For ASIC mining machines there is no purpose beyond the singular task they were created to do, meaning they immediately become electronic waste afterward.
The Bitcoin E-waste Monitor tracks the electronic generation of the Bitcoin network by applying a simple back-of-the-envelope calculation based on the observable computational power in the network. Just like we know the least amount of energy required to produce a unit of computational power, we also know the minimal amount of equipment weight per unit of computational power. A multiplication then yields a lower bound estimate for the amount of equipment currently in the network. It is then assumed that this equipment will become obsolete in 1.5 years, as supported by Koomey’s Law and observable improvements in Bitcoin mining hardware. More details on this methodology can be found here. The E-waste Monitor returns the annualised output. Relatively heavier devices, or electronic waste as a result of other equipment employed for Bitcoin mining (like cooling), have not been taken into consideration.
To put the amount of electronic waste generated by the Bitcoin network into perspective, we can compare the network’s output to the electronic waste generated by various countries. The result of which is shown below.
Even though it is shocking to find that Bitcoin’s electronic waste output is equal to that of a country, the real shock is in the electronic waste footprint per processed transaction. The following chart offers a comparison between the electronic waste footprint of a single Bitcoin transaction, several common household items and the electronic waste footprint per transaction processed by a financial institution like VISA.
The enormous amount of electronic waste generated by the Bitcoin showcases why renewable energy can never solve Bitcoin’s sustainability problem. It is already unlikely that renewable energy can mitigate the environmental impact of Bitcoin’s energy consumption, but eletronic waste makes for a completely separate problem. Globally only 20% of all electronic waste is recycled, the rest makes its way to environmentally damaging and dangerous landfills.
Given both the fundamental challenges in combining Bitcoin with “green” renewable energy, as well as the electronic waste generation by the network, it should be concluded that the only way to make Bitcoin truly sustainable is to replace its mining mechanism. Alternatives to this (e.g. Proof-of-Stake) are already available and used by an array of alternative cryptocurrencies. It is about time that the Bitcoin community follows the example already set by others.