According to the New York Times, Bitcoin mining uses 0.5% of all global energy consumption.
The report stated that this is roughly seven times the annual energy consumption of Google.
As cryptocurrency grows in popularity, the negative effects of Bitcoin on the environment will be more prominent.
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Although Bitcoin's value has increased nearly fivefold over the past year, it is leading to significantly greater energy consumption worldwide.
This is due to more people competing to mine bitcoin. The process involves solving complex mathematical puzzles that verify digital currency transactions. These miners get a share of bitcoin. The more people that compete to mine it, the more energy they will need.
Although it's hard to quantify how much energy bitcoin mining uses, a New York Times analysis shared some amazing data that helps put the energy consumption in perspective.
Bitcoin mining uses approximately 91 terawatt hours of electricity per year.
This is more electricity than Finland's total annual consumption of 5.5 million inhabitants.
This is almost 0.5% of global electricity consumption, a 10x increase from five years ago.
This is about the same amount as electricity consumed in Washington every year and more than a quarter of electricity used in residential cooling in the US each year.
It's seven times more electricity than all the global operations of Google.
It's easy to see that electricity consumption will continue to rise due to bitcoin's huge price appreciation over the past few years. Bitcoin's value has increased by roughly fivefold from last year to approximately $50,000. It was valued at $500 in 2016.
Bitcoin mining is a growing industry that requires specialized machines and servers as well as huge data centers with sufficient cooling capacity to prevent the computers overheating.
The internal mining process has become more complicated. According to the New York Times in 2011, a single computer could mine bitcoins back then, when cryptocurrency was still relatively new. It takes "13 years of normal household electricity" to mine one bitcoin.
One "bitcoin farm" in Moscow has hundreds of computers that simultaneously mine bitcoin. Maxim Zmeyev/AFP via Getty Images
The environmental impacts of mining have long been a concern for those who follow bitcoin and other cryptocurrency developments. This year, Iran was hit by several power outages that were partially due to bitcoin. Bill Gates in March warned that bitcoin was not a good thing for the climate. U.S. Treasury Secretary Janet Yellen called it "staggering" in terms of energy consumption.
Some asset managers are now looking at ways to reduce the environmental impact of crypto. Michael Hanus, senior managing director of alternative investments platform RealBlocks previously stated to Insider that asset mangers are becoming more aware of crypto's sustainability problems.
Hanus mentioned ESG analysis. This is an investing philosophy that encourages firms consider the environmental, social and corporate governance impacts of an investment. ESG analysis is a common tool for improving portfolios. Many managers were initially focused on the G', the governance aspects. Hanus stated that this is changing now and that there is more emphasis on the ESG 'E and 'S'.
Asset managers, in other words are trying to balance cryptocurrency's negative environmental and social effects with the potential gains it could bring investors.
