Experts raise alarm as Bitcoin mining’s water usage could exacerbate the global water shortage, with a single transaction requiring swimming pool-sized volumes.

New research reveals Bitcoin’s substantial water footprint, challenging the sustainability of cryptocurrency mining in an era of water scarcity.

As the world grapples with a growing water crisis, the demand for water in cryptocurrency mining, particularly Bitcoin, is coming under scrutiny.

Alex de Vries, a financial economist and PhD student at Vrije Universiteit Amsterdam, recently highlighted in Cell Reports Sustainability the extensive water consumption associated with Bitcoin mining.

He warns that without regulatory measures, this practice could significantly strain potable water resources, especially in water-scarce regions like the U.S.

“Many parts of the world are experiencing droughts, and fresh water is becoming an increasing scarce resource,” comments de Vries (@Digiconomist), a PhD student at Vrije Universiteit Amsterdam. “If we continue to use this valuable resource for making useless computations, I think that reality is really painful.”

Earlier studies on the resource demands of cryptocurrencies have largely concentrated on their substantial electricity usage. In the race to mine Bitcoin, the most widely used cryptocurrency, miners globally are engaged in a high-stakes contest to solve complex mathematical puzzles online. Success in this endeavor grants them a portion of Bitcoin’s value. Within the Bitcoin network, the scale of this operation is immense, with miners making approximately 350 quintillion guesses – a figure with 18 zeros – every second, necessitating an enormous amount of computational power.

According to de Vries, “The right answer emerges every 10 minutes, and the rest of the data, quintillions of them, are computations that serve no further purpose and are therefore immediately discarded.”

However, less known is the fact that this process also requires substantial water resources to cool down the massive data centers. De Vries’ research indicates that in the U.S. alone, Bitcoin mining’s water consumption ranges between 8.6 to 35.1 gigaliters (GL) annually. This includes water used in cooling the computers and in coal- and gas-fired power plants that power these operations. The water used in this cooling process evaporates, rendering it unrecoverable.

Globally, Bitcoin mining’s water usage was over 1,600 GL in 2021, with an average transaction on the Bitcoin blockchain consuming about 16,000 liters of water—enough to fill an entire backyard swimming pool. Projections suggest this consumption could rise to 2,300 GL by 2023.

In the U.S., the annual water consumption for Bitcoin mining is comparable to that of 300,000 households or a major city like Washington, D.C. De Vries also highlights the environmental implications of Bitcoin’s price fluctuations, noting that higher prices lead to increased environmental impacts due to heightened mining activity.

“The price of Bitcoin just increased recently and reached its highest point of the year, despite the recent collapse of several cryptocurrency platforms. This will have serious consequences, because the higher the price, the higher the environmental impact,” de Vries adds. “The most painful thing about cryptocurrency mining is that it uses so much computational power and so much resources, but these resources are not going into creating some kind of model, like artificial intelligence, that you can then use for something else. It’s just making useless computations.”

With its value exceeding $37,000 per unit, Bitcoin’s global presence continues to grow. This expansion is particularly impactful in Central Asian countries, where arid conditions are already stressing local water supplies. The surge in Bitcoin mining activities is amplifying this strain. For instance, in Kazakhstan, a key player in global cryptocurrency mining, Bitcoin operations accounted for a staggering 997.9 gigaliters (GL) of water usage in 2021. As Kazakhstan faces its own water crisis, the increasing water demands of Bitcoin mining could further intensify this challenge.

De Vries proposes potential solutions, such as altering the software used in Bitcoin mining to reduce both its electricity and water requirements. Another approach is to harness renewable energy sources, like wind and solar power, which do not rely on water.

However, he raises a critical point regarding the allocation of these renewable resources. In several countries, including the U.S., renewable energy availability is limited.

Redirecting these resources to cryptocurrency mining might lead to increased reliance on fossil fuels for other energy needs, presenting a dilemma over the actual environmental benefits of such a shift.

Image Credit: iStock