environmental effects of bitcoin
The environmental effects of bitcoin are significant. Bitcoin mining, the process by which bitcoins are created and transactions are finalized, is energy-consuming and results in carbon emissions as about half of the electricity used is generated through fossil fuels. As of 2022, bitcoin mining is estimated to be responsible for 0.2% of world greenhouse gas emissions, and to represent 0.4% of global electricity consumption. Moreover, Bitcoins are mined on specialized computer hardware with a short useful life expectancy, resulting in electronic waste. The amount of electrical energy and e-waste generated by bitcoin mining is often compared with countries like Greece or the Netherlands.

Greenhouse gas emissions
Mining as an electricity-intensive process
Bitcoin mining is a highly electricity-intensive proof-of-work process. Miners run bitcoin-mining software and compete against each other to be the first to win the current 10 minute block and therefore receive the block reward. The bitcoins are the said block reward. A transition to the more energy-efficient proof-of-stake has been described as a sustainable alternative to Bitcoin's proof-of-work and as a potential solution to its environmental issues.Bitcoin mining's distribution makes it difficult for researchers to identify miners's location and electricity use and therefore to translate energy consumption into carbon emissions. 
As of 2022, the Cambridge Centre for Alternative Finance (CCAF) estimates that bitcoin consumes 95.5 TW⋅h (344 PJ) annually, representing 0.4% of the world's electricity consumption, ranking bitcoin mining between Belgium and the Netherlands in terms of electricity consumption. Per a 2021 study published in Finance Research Letters, the differences in underlying assumptions and variation in the coverage of time periods and forecast horizons have led to bitcoin carbon footprint estimates spanning from 1.2–5.2 Mt CO2 to 130.50 Mt CO2 per year. According to a 2022 estimate published in Joule, bitcoin mining may result in annual carbon emission of 65 Mt CO2, representing 0.2% of global emissions, which is comparable to the level of emissions of Greece.

Comparison to other payment systems
One 2021 study by cryptocurrency investment firm Galaxy Digital claimed that bitcoin mining used less energy than the banking system as, contrary to banking, bitcoin mining's energy usage is not correlated with its transactional volume. The International Monetary Fund estimates in 2022 that the global payment system represented about 0.2% of global electricity consumption, comparable to the consumption of Portugal or Bangladesh. Citing the Galaxy Digital report, the authors note that the energy consumption of the entire banking sector is larger as banks offer more services than just payments.Energy used is estimated between 100 and 1,000 kilowatt-hours per transaction. However, Bitcoin's energy expenditure is not directly linked to the number of transactions and this estimate does not reflect the energy efficiencies from layer 2 solutions, like the Lightning Network, and batching, which allow Bitcoin to process more payments than the number of on-chain transactions suggests. For instance, as of 2022, Bitcoin processes 100 million transactions per year, representing 250 million payments. Still, the IMF notes that comparisons remain valid as credit card transactions only use 0.001–0.01 kWh.In September 2022, a study in Scientific Reports found that from 2016 to 2021, each US dollar worth of mined bitcoin market value caused 35 cents worth of climate damage. This is comparable to the beef industry which causes 33 cents per dollar, and the gasoline industry which causes 41 cents per dollar. Compared to gold mining, "Bitcoin's climate damage share is nearly an order of magnitude higher" according to study co-author economist Andrew Goodkind.

Bitcoin mining energy mix
Until 2021, most bitcoin mining was done in China. Chinese miners relied on cheap coal power in Xinjiang and Inner Mongolia in late autumn, winter and spring, and then migrated to regions with overcapacities in low-cost hydropower, like Sichuan and Yunnan, between May and October. In June 2021, China banned bitcoin mining and miners moved to other countries. By August 2021, mining was concentrated in the U.S. (35%), Kazakhstan (18%), and Russia (11%) instead. The shift from coal resources in China to coal resources in Kazakhstan increased Bitcoin's carbon footprint as Kazakhstani coal plants use hard coal, which has the highest carbon content of all coal types. Despite the ban, covert mining operations gradually came back to China, reaching 21% of global hashrate as of 2022.Reducing the environmental impact of bitcoin is possible by mining only using clean electricity sources. As of 2021, according to The New York Times, bitcoin's use of renewables ranged from 40% to 75%. As of 2023, according to Bloomberg Intelligence, renewables represent about half of global bitcoin mining sources. Still, experts and government authorities, such as the Swedish Financial Supervisory Authority, the European Securities and Markets Authority and the European Central Bank, have suggested that the use of renewable energy for mining may limit the availability of clean energy for ordinary uses by the general population.The development of intermittent renewable energy sources, such as wind power and solar power, is challenging because they cause instability in the electrical grid. Several papers concluded that these renewable power stations could use the surplus energy to mine bitcoin and thereby reduce curtailment, hedge electricity price risk, stabilize the grid, increase the profitability of renewable energy infrastructure, and therefore accelerate transition to sustainable energy and decrease bitcoin's carbon footprint. According to a 2023 review published in Resource and Energy Economics, Bitcoin mining can indeed increase renewable capacity but it may increase carbon emissions. However, using Bitcoin to provide demand response largely mitigates its environmental impact. Conversely, Bitcoin mining may also incentivize the reopening of abandoned fossil fuels plants. For instance, Greenidge Generation, a closed coal-fired power plant in New York State, was converted into natural gas to mine Bitcoin. Such impact is difficult to quantify.

Methane emissions
Bitcoin has been mined via electricity generated through the combustion of associated petroleum gas (APG), which is a methane-rich byproduct of crude oil drilling that is sometimes flared or released into the atmosphere. Methane is a greenhouse gas with a global warming potential 28 to 36 times greater than CO2. By converting more of the methane to CO2 than flaring alone would, using APG generators reduces the APG's contribution to the greenhouse effect, but this practice is still harmful to the environment. In places where flaring is prohibited (such as Colorado) this practice has allowed more oil drills to operate by offsetting costs, which further delays fossil fuel phase-out. This process also allows oil companies such as ExxonMobil to report lower emissions by selling gas leaks, shifting responsibility to buyers and avoiding a real reduction commitment.

Electronic waste
Bitcoins are usually mined on specialized computing hardware, called application-specific integrated circuits, with no alternative use beyond bitcoin mining. Due to the consistent increase of the bitcoin network's hashrate, mining devices are estimated to have an average lifespan of 1.3 years until they become unprofitable and need to be replaced, resulting in significant electronic waste. As of 2021, Bitcoin's annual e-waste was estimated to be over 30,000 tonnes, which is comparable to the small IT equipment waste produced by the Netherlands, while each Bitcoin transaction was estimated to result in 272 g (9.6 oz) of e-waste.

Responses
In March 2022, President Joe Biden signed an executive order calling for the Environmental Protection Agency (EPA) to compile a report that "address[es] the effect of crypto-assets' consensus mechanisms on energy usage, including mitigating measures, alternative consensus mechanisms, and design tradeoffs." In September 2022, a report of the US Office of Science and Technology Policy highlighted the need for increased transparency about electricity usage, greenhouse gas emissions, and e-waste. In November 2022, the EPA confirmed being working on the climate impacts of cryptocurrency mining. Some US states, such as Kentucky, Montana, Texas, and Wyoming encourage Bitcoin mining with tax breaks while New York State banned new fossil fuel crypto mining plants with a two-year moratorium, citing environmental concerns.Per a 2021 study in Finance Research Letters, "climate-related criticism of bitcoin is primarily based on the network's absolute carbon emissions, without considering its market value." It argues that the inclusion of bitcoin in an equity portfolio reduces that portfolio's "aggregate carbon emissions".

References
Sources
Agur, Itai; Deodoro, Jose; Lavayssière, Xavier; Martinez Peria, Soledad; Sandri, Damiano; Tourpe, Hervé; Villegas Bauer, German (2022). Digital Currencies and Energy Consumption. International Monetary Fund. ISBN 979-8-4002-0824-9.
de Vries, Alex; Gallersdörfer, Ulrich; Klaaßen, Lena; Stoll, Christian (16 March 2022). "Revisiting Bitcoin's carbon footprint". Joule. 6 (3): 498–502. doi:10.1016/j.joule.2022.02.005. ISSN 2542-4351. S2CID 247143939.