An extended approach to appraise electricity distribution and carbon footprint of bitcoin in a smart city

Abstract

A nation cannot sustain a highly productive and efficient population without smart cities. Due to their significant reliance on digital technologies, these cities require a high level of cybercrime protection. Cryptocurrencies have gained significant attention due to their secure and reliable infrastructure. The decentralised cryptocurrency operates in a trust-less environment known as the blockchain, where each network participant has a ledger copy of all transactions. Blockchain technology employs a proven consensus mechanism without requiring establishment of a central authority. But the consensus mechanism requires miner to solve a cryptographic problem by generating random hashes until one of them matches the desired one. This procedure is energy-intensive, and when thousands of miners repeat it to verify a single transaction, a substantial amount of electricity is consumed. Moreover, electricity produces a significant amount of carbon footprint. Patch methodology utilises the data of all hashes created per year and the efficiency of mining hardware over a 10-year period to calculate the Bitcoins energy consumption. Due to a large number of unknown and uncertain factors involved, it is difficult to precisely calculate a single value for electricity consumption and carbon footprint as reported by Patch methodology. The proposed method extends the Patch methodology by adding a maximum and minimum limit to the hardware efficiency as well as the sources of power generation, which can help refine estimates of electricity consumption and carbon emissions for a more accurate picture. Using the proposed methodology, it was estimated that Bitcoin consumed between 38.495 and 120.72 terawatt hours of electricity in 2021 and released between 2.12 and 45.37 million metric tonnes of carbon dioxide. To address the issue of excessive energy consumption and carbon emissions, a significant number of individual miners and mining pools are relocating to energy-intensive regions, such as aluminium mining sites that rely on hydroelectricity for energy generation.