All this takes electricity. According to Digiconomist, around 77 terawatt hours of electricity annually are needed by the Bitcoin network, roughly the electricity used by Chile, emitting 37 megatons of carbon, the same as New Zealand.
Miners have turned to wind or geothermal energy power to avoid traditional power costs.
Peter Wall, of London-listed miner Argo Blockchain, says its own operations rely on hydroelectric power in Canada and the US. He says: “The sector is still maturing and I expect we will see a lot of miners follow our lead.”
In Iceland, meanwhile, Genesis Mining, led by chief executive Marco Streng, has been harnessing the northern nation’s geothermal energy to power its data centres.
“Electricity consumption plays an immense role,” says Streng. “Iceland and the nordic countries are perfect in this regard. It is a cool climate and we can get close to renewable energy sources.”
However, most of Bitcoin’s mining power is believed to come from fossil fuel sources. China-based Bitcoin miners control more than 60pc of all Bitcoin processing power, and coal accounts for half of Chinese energy consumption.
Bitcoin mining has even been blamed for blackouts in Iran, where the power consumption of cryptocurrency mining firms has increased demands on its electricity network. Winter smog blanketing its capital city Tehran has become a major issue, with most power coming from natural gas or oil.
While Bitcoin’s carbon emissions may be troubling now, they are likely to get worse, says De Vires.
Every time the price of Bitcoin spikes – the coin hit $42,000 earlier in January – demand for mining goes up. If its price is higher, miners stand to make more profit and so can bring more processing machines online.
In fact, the most popular Bitcoin processors, Antminers made by China’s Bitmain, are expected to be out of stock until August due to demand and are now selling for more than $3,700 each having doubled in price. Such hardware could ultimately become a problem of its own as e-waste mounts, says De Vires.