Mexico positioned itself as the Latin American country with the highest adoption of cryptocurrenciessince it is calculated that 24 percent of Mexicans own some cryptocurrency, which meant a 63 percent increase in its adoption in 2023, compared to 2022, however, the demand for electricity associated with its operations grew rapidly in recent years.
This increase in electricity consumption caught the attention of policy makers and network planners concerned about its effects on costs, reliability and emissions.
Major Challenges Associated with Tracking Cryptocurrency Mining Energy Consumption include the difficulty of identifying activity among millions of end customers and the dynamic nature of this market.
If bitcoin were a country, would consume more electricity per year than Finland, Switzerland or Argentinaaccording to an analysis by the specialized consulting firm Digiconomist, which indicates that the machines that make Cryptocurrency mining consumes large amounts of energy which comes mainly from fossil fuels.
“In 2023, the electrical energy required for bitcoin mining doubled. “Analysts assure that there is a direct correlation between this increase and that of prices,” he noted. Silvina MoschiniCEO and founder of the cryptocurrency unicoin.
He explained that it is no coincidence that The increase in energy consumption has occurred in parallel with the growing adoption of bitcoin in Mexico and in several Latin American countries, as well as the institutional acceptance that the US Federal Reserve gave to ETFs (bitcoin-traded funds).
In 2023 alone, the consulting firm Digiconomist estimated that bitcoin mining used 121 thousand 36 gigawatt-hours (GWh)a record that has a strong impact on the environment and surpassed the consumption of countries such as Norway, Argentina, Ukraine or Malaysia.
This amount represented 35.5 percent of the estimated 340,713 gigawatt-hours of electrical energy consumed in Mexico in 2023, according to data from the National Electrical System Development Program (Prodesen).
“The red flags that represent the electrical increases due to cryptocurrency mining should remind us that bitcoin is not necessarily synonymous with an environmentally friendly cryptocurrency; we need, as consumers of crypto assets, to opt for solutions with minimal ecological impact,” Moschini stated.
He detailed that currently, options such as the Solana token, for example, demand half the electrical energy of a Google search, while the Cardano cryptocurrency, has stood out from the beginning for using a validation mechanism (proof of stake) that consumes much less electricity than bitcoin mining.
Fingerprints for Bitcoin transactions
Because this currency reached one of its highest levels of adoption in Mexico, energy consumption from mining grew significantly, reiterated Silvina Moschini, who assured that The carbon footprint is equivalent to 2 million 707 thousand 319 VISA transactionsas well as 203,587 hours of viewing on YouTube.
“The entire bitcoin network now consumes more energy than in several countries. If bitcoin were a country, it would be classified in the top 20 countries that consume the most energy annually,” explains the directive.
In this sense, Experts warn of the need for the technology responsible for mining bitcoin to begin to be more sustainableespecially if one considers that in countries like Mexico the desire to carry out transactions with this and other cryptocurrencies will increase due to the nearshoring.
“In Mexico, the use of cryptocurrencies is expected grow in 2024 derived from greater confidence and nearshoringwhich has put the use of cryptocurrencies back on the market due to the fact that companies from Hong Kong, Singapore, China and Taiwan that have arrived in the country are beginning to carry out their commercial operations using cryptocurrencies,” he commented. Fernando Martínez FernándezCEO of Nonco, a company specialized in cryptocurrency brokerage.
He detailed the more than Mexico imports 119 billion dollars from China, around 5 percent of commercial transactions are made with cryptocurrenciesa figure that is expected to reach 10 percent in 2024 as a result of the more than 3 thousand Asian companies that have so far arrived in Mexico with nearshoring.
With the above, the CEO and founder of Unicoin, requested that Cryptocurrency mining evolves and adapts to the global need to reduce energy consumption. If not, he said, it could be affected because the consumer wants to join sustainable actions.
“It is necessary for blockchain technology to evolve as soon as possible because cryptocurrency mining cannot continue to occur as before, with high energy consumption from fossil fuels,” Moschini concluded.
