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Updated Jul 2022

Is Bitcoin bad for the environment?

by Hashdex Research
3 min read
5 pages

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Bitcoin allows users to securely send and receive payments across the world, without needing a centralized authority to guarantee the transactions. This unique combination of immutability, security, and scarcity is revolutionizing modern-day finance and access to financial services. There are many misconceptions about Bitcoin, however, including about how it is used and who benefits from the network. One of the most common misperceptions is that Bitcoin and other Proof-of-Work networks are more harmful to the environment than traditional payment systems. This view has led some policymakers to consider banning the Proof-of-Work consensus mechanism. Unfortunately, this perspective ignores some well-documented facts about how the Bitcoin network works and how energy is used in our everyday lives. With a Proof-of-Work network, miners run computers to cryptographically secure and validate a transaction before it is added to the blockchain. The energy usage from this process is what is driving the opinion that bitcoin is disproportionately contributing to climate change. 

© 2022 Hashdex Asset Management Ltd.
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