Bitcoin's Thirst For Water Is Just As Troubling As Its Energy Appetite

It probably won't come as a shock to those aware of the electricity usage of the Bitcoin network, but the world's most popular cryptocurrency also uses tons of water to keep itself running.

According to Digiconomist founder and Vrije University data science PhD candidate Alex de Vries, the Bitcoin network may be using as much as 2,237 gigaliters of water in 2023, which equates to around 590 billion US gallons, or 492 billion imperial gallons, De Vries concluded in a paper published yesterday. 

To put that in perspective, let's look at just the US alone, where around a third of the world's Bitcoin mining takes place. In the course of a year, US Bitcoin mining operations chug somewhere between 39 and 120 gigaliters of water, De Vries estimates, which is equivalent to the water consumption of 300,000 US households, or a city the size of Washington DC.

Bitcoin mining is the process of solving cryptographic problems to validate entries on the blockchain. It's an incredibly energy intensive process incentivized by paying miners in newly minted Bitcoin; the higher the price the more miners participate, and the more energy is burned to solve a transaction.

The price of Bitcoin crashed last year, leading to a comparable drop in electricity and water consumption, but a rebound this year led to an all-time high in energy consumption in March 2023, De Vries said in his paper. March's annualized energy usage amounted to around 141.9 terawatt-hours – a 35 percent increase compared to energy usage in 2021.

With the price of Bitcoin continuing to climb over the course of 2023, "water consumption is probably at an all-time high right now too," De Vries told The Register – even higher than earlier this year. 

Much of the reporting on Bitcoin's environmental impact has centered on its carbon footprint and electricity usage, which De Vries has maintained a record of on Digiconomist since founding the site in 2014. Water usage has been far less reported; Cell Reports, where De Vries' paper was published, says his research is the first comprehensive look at Bitcoin's water use. 

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"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," De Vries said.

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Again, to put things into perspective, De Vries cites estimates from 2021, when global Bitcoin mining operations used around 1,600 GL of water, which amounts to around 16,000 liters of water per Bitcoin transaction – 6.2 million times more than the amount of water used for a single credit card swipe. Keep in mind the estimated water usage is even higher this year.

With such an environmental impact, is there anything that can be done to reduce Bitcoin's water footprint? Yes, but whether it'll happen is another thing altogether.

"What you can do technically is a completely different story from what will likely happen," De Vries told us, citing Ethereum's transition to proof-of-stake, a blockchain consensus mechanism that uses far less energy to validate transactions. "It's not an exaggeration to say this could all be solved tomorrow," De Vries added.

It's the Bitcoin community that De Vries sees as the biggest hurdle to jump in making its digicoin of choice more environmentally friendly. "The Bitcoin community is extremely conservative and doesn't want to change anything about Bitcoin – its mechanism, transaction cap – anything," De Vries said. Bitcoiners, De Vries added, see their coin as a stable store of value because it isn't prone to making such drastic changes as switching its mechanism, "and that's a sticking point."

De Vries cited recent EU cryptocurrency regulations that require disclosure of environmental impact as a way to lead to greater awareness of what it costs to keep the Bitcoin blockchain running, which he notes in the paper could spell serious problems for the world amid growing water scarcity.

In Kazakhstan, which became a large source of Bitcoin mining after China banned the practice, water shortages are already becoming a crisis, with climate change-exacerbated water shortages predicted to leave the country's capital 75 GL short of water by 2030. In 2021, Kazakhstani Bitcoin mining consumed around 1,000 GL of water, De Vries said.

"There's no obvious evidence that this is a concern within the BTC community," De Vries told us. ®