New research reveals implications of bitcoin's rapid growth — here's what you need to know

New research reveals implications of bitcoin’s rapid growth — here’s what you need to know

June 21, 2025

As bitcoin has skyrocketed in popularity over the past few decades, the value of the digital asset has also risen. In September, bitcoin’s market cap crossed $1 trillion, and The Motley Fool (via Nasdaq) predicts it could be worth a whopping $20 trillion by 2030.

Unfortunately, the cryptocurrency requires a lot of energy for the computer mining process to create new coins and verify transactions, so the benefits also come with some downsides.

How is bitcoin impacting the environment?

The London School of Economics and Political Science explained that as the world has rushed to combat rising global temperatures, bitcoin has become the fastest asset to ever reach $1 trillion in value — but while the industry has made strides to increase its use of renewable energy, that popularity also means increased demand for the electricity to power the platform.

A study by Digiconomist revealed that if bitcoin were a country, it would rank 24th in terms of energy usage. The digital asset also harms the planet in other ways; it has a carbon footprint comparable to that of Qatar, produces a similar amount of electronic waste as the Netherlands since the ASIC mining hardware frequently needs updating or replacing, and uses as much water as Switzerland annually.

A study published in the Journal of Public Economics found that every $1 increase in the price of bitcoin leads to $3.11 to $6.79 in external damages from carbon pollution alone, far surpassing the value it adds through mining.

This may be an oversimplification, but the idea is to illustrate that there is a pollution impact from the existence of bitcoin, through its intensive proof-of-work validation method, that would be less in an alternate reality where the prevailing cryptocurrency were to use proof-of-stake, for instance. After the Ethereum platform made the switch to PoS, it announced that it had reduced energy usage by approximately 99.5%.

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There is a tradeoff, where experts say PoW is a bit more secure at the expense of requiring miners to solve complex mathematical problems — an extremely energy-hungry process. Proponents of bitcoin say the trade-off is worth it, with William Szamosszegi, founder of bitcoin mining company Sazmining, saying it’s important “to judge a novel invention by the degree to which it solves a problem in society” and that “PoW enables sound money and a decentralized currency backed by real-world energy.”

To help with mitigating the effects of those major energy demands and drive down long-term costs, the industry is increasingly shifting toward renewable energy sources, with a recent Cambridge study showing a phenomenal improvement to 52.4% of the energy behind bitcoin coming from renewable energy (42.6%) and nuclear (9.8%), though the remaining energy required still comes from fossil fuels. The Cambridge study also noted an important decrease in coal, though, as the dirtiest of fuel sources.

“Natural gas, at 38.2% (up from 25.0% in 2022), has replaced coal (now 8.9%, down from 36.6% in 2022) as the single largest energy source used in Bitcoin mining,” the study said.

Why does the environmental toll of bitcoin matter?

As society transitions toward cleaner energy sources and strives to mitigate the effects of rising global temperatures, bitcoin mining could hinder progress, though proponents make the argument that the profits bitcoin mining can bring actually help to further justify and spur additional investments in renewables. Some bitcoin mining companies, such as Mara Holdings, have even purchased their own wind farms, though others operate their own natural gas plants.

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While LSE authors noted that stricter climate policies, such as requiring miners to use sustainable energy sources as Mara does, could improve the currency’s sustainability, several roadblocks exist.

A new study published in Energy Economics said that bitcoin mining benefits from a consistent energy output, which gives dirty fuels a competitive advantage over variable sources of power, such as solar and wind. That said, battery storage easily solves this after an initial investment, and beyond that, many bitcoin mining companies have nonetheless struck deals with energy providers to switch their operations off when energy demand is high, which doubly makes sense since the cost of that electricity goes up at peak times in many markets.

The negative impacts of bitcoin are also felt at times in other ways. Bitcoin mining’s large and often unpredictable energy demands have strained local power grids in some places and have been blamed for increased electricity rates for residential and business users.

In addition, people living near crypto facilities have reported health issues ranging from insomnia to permanent hearing loss to higher stress levels. Residents in Tennessee have also expressed concerns about how an up-and-coming crypto data center would impact their water quality and electric bills.

How the industry is becoming more sustainable

Several alternatives to bitcoin have emerged that are committed to sustainability initiatives. Beyond Ethereum, the blockchain platform Cardano is another example of a cryptocurrency system that operates on a proof-of-stake consensus mechanism, resulting in far less pollution.

The newly launched cryptocurrency lightchain AI is committed to green crypto, meaning it will invest in renewable energy, purchase carbon credits, and take other eco-friendly actions.

On a similar level, separate from crypto, clean economy stocks and green banks have become increasingly popular, and the investment platform GreenPortfolio can help with guiding investments in a way that avoids supporting dirty energy.