Bitcoin is a cryptocurrency thirsty for water: its consumption is becoming alarming

We know that cryptocurrency is electricity intensive, it is also water intensive. All transactions would cost 1,575 gigaliters of water in 2021 and could be around 2,200 gigaliters this year. Cause: electricity-intensive mining, during the production of which water is lost in the form of steam.

When you go to checkout, paying with a credit card hides your water usage. This transaction will actually be processed in a data center that requires electricity to operate and water to produce it. But for a Bitcoin cryptocurrency transaction, it’s significantly worse: about 6.2 million times worse. In total, each Bitcoin transaction cost an average of more than 16,000 liters of water in 2021, the equivalent of a private swimming pool. And these costs have been increasing over the years. This is what Alex de Vries, a researcher at the Free University of Amsterdam (Vrije Universiteit Amsterdam) and founder of Digiconomist, a site revealing the implications of digital technology, showed in a study published in November 2023.

“Bitcoin’s water consumption has been poorly documented until now. Most of the studies looked at the cryptocurrency’s electricity consumption,” describes Alex de Vies. This consumption is also documented daily by the University of Cambridge and is equivalent to the consumption in a country like Poland. “But today, in the context of water scarcity becoming more of a concern due to climate change, the issue of Bitcoin’s water consumption has become more important.”notes Alex de Vries.

Consumption that grows every year

Therefore, several studies have been interested in the proportion of water used to operate cryptocurrency. And the numbers are unbelievable. In 2020, the cryptocurrency – and its 100 million transactions per year – required nearly 600 giga liters (GL) (or 600,000,000,000 liters), an amount that nearly tripled to 1,575 GL in 2021. This year, the researcher estimates that the water used will be approximately 2,200 GL. While the traditional financial world and its 2,000 billion per year dematerialized payments use “only” 1,800 GL of water.

Bitcoin Water Consumption by Country in 2021 // Source: Alex de Vries, Bitcoin’s Growing Water Footprint, Cell Reports Sustainability (2024)

Here, “consumed water” represents the proportion of water lost as steam. These losses can occur in two stages:

  • Water is often used to cool power plants (gas or coal) to generate the electricity needed to run computer farms that process cryptocurrency transactions.
  • In the same way, in these centers it is necessary to cool the equipment to avoid overheating, often with water as well. Second, Alex De Vries estimated that in the United States it represents about 10 to 20% of the footprint.

“At worst, the numbers I give are too optimistic”

Alex De Vries

For these calculations, the researcher could rely on an already proven methodology. Bitcoin’s energy consumption data that allowed the researcher and other teams to estimate Bitcoin’s carbon footprint. “And here, to estimate the amount of water lost, the method is the same. We simply have to replace the carbon footprint of electricity production with its water consumption.”, explains the researcher. When it comes to the amount of water useful for cooling computers, Alex De Vries again relied on the work of researchers. “The study was interested in finding the most optimal characteristics for a computer farm. That’s why I placed myself in these optimal conditions for each of the farms in the United States. So, at worst, the numbers I’m giving are too optimistic.declares.

The authentication system in question

This gluttony in electricity, and therefore water, is due to Bitcoin’s proof-of-work mode of operation (Proof-of-Work). To verify each transaction, millions of machines compete to solve the same complex puzzle. The first contestant to successfully complete the game is rewarded with some Bitcoins. “This happens at any time of the day, of course it uses a lot of electricity”warns the researcher.

But this does not explain everything: while the number of bitcoin transactions is relatively stable from year to year, how can we explain that consumption is growing so much? “This is mainly related to the price of Bitcoin. The more valuable it is, the more resources miners can afford to use. But the geographic location of the centers also plays a role.”, explains Alex De Vries. However, since 2021 and the ban on cryptocurrencies from China, farms have been created mainly in the United States and Kazakhstan. “However, this second is perhaps one of the worst places because electricity production uses a lot of water”, he laments. This explains the increase from 600 GL in 2020 to 2,200 GL in 2023.

In order to reduce this, a transition to renewable energy sources is desirable – and therefore the implementation of new means of production seems to be the solution. “But it has to be the sun or the wind because hydroelectricity loses a lot of water to evaporation”, warns. Perhaps the most effective is to change the operation verification protocol. In 2022, the second largest cryptocurrency Ethereum moved from proof of work to proof of stakes, where this time there are no more complex puzzles to solve. “Immediately, this change made them reduce their electricity consumption by 99.84%,” calculated the researcher in 2023. Although the calculation is not done for water, this consumption has also been drastically reduced.

Source: Edited by Nino Barbey for Numerama

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