Virtual World, Real Emissions

The Carbon Footprint of Cloud Computing and Bitcoin

From analytics apps to online video games, the internet’s effect on climate change is huge. Here, we break down why — and how to make it greener.
Posted on
June 24, 2021
The Carbon Footprint of Cloud Computing and Bitcoin

It almost seems like magic, doesn’t it?

The infinite photo storage, sophisticated websites and endless YouTube videos. Stock trading, cryptocurrencies and artificial intelligence — all at your fingertips.

This elaborate virtual world doesn’t appear out of thin air, though, despite its “cloud” designation. The out-of-sight, out-of-mind nature of what happens behind our screens means that most of us don’t give much mind to its environmental impact

There’s no physical waste, no visible exhaust. And surely the carbon footprint of our laptops and smartphones isn’t large enough to cause serious concern.

Laptops and mobile devices using cloud-based services on the web

The carbon footprint of the Internet

Behind the wizardry, though, are data centers located around the globe, filled to the brim with computer servers and running on a lot of power

How much electricity do data centers use?

According to a recent report in the journal Science, about one percent of global electricity use can be attributed to these data centers. In 2018, that would have been roughly 205 terawatt-hours, enough to power almost 17.5 million homes.

Netflix’s carbon footprint could have powered 40,000 U.S. homes in 2019.

Does sending emails leave a carbon footprint?

In a 2021 report on email pollution, Cleanfox found that promotional emails are responsible for two million tons of CO2 emissions every year in the UK. (Worth noting: Cleanfox is a service that clears your inbox of all unwanted newsletters and other emails so, no, they are definitely not unbiased.)

What is the carbon footprint of Netflix?

Netflix’s carbon footprint could have powered 40,000 U.S. homes in 2019.

How much electricity does Bitcoin use?

Apparently, Bitcoin uses up more electricity than Argentina (or about the same as Belgium).

Turns out, the internet’s carbon footprint — or, the collection of virtual services we refer to as “the cloud” — is not as lightweight as it sounds.

Let’s break it down 

What is cloud computing?

In a nutshell: Cloud computing allows computing services (think: storage, software, analytics, databases, AI, etc.) to be delivered over the internet or “the cloud.”

Rather than companies having their own individual data centers and servers, they can opt for virtual, as-needed IT resources. Instead of software and files taking up processing and memory on your device (hello, hundreds of vacation and baby photos), you can pay for monthly space in the cloud and access your files wherever there’s an internet connection.

As a consumer, you’re likely familiar with Google Drive, Netflix and Dropbox — just a few examples of cloud services. There are also countless cloud business applications available to corporations, everything from accounting software to web design tools.

These cloud servers store and back up data. They run functional web applications, software development and testing, artificial intelligence, email, disaster recovery and much more.

Banks use cloud computing to detect and prevent fraud. Healthcare uses the cloud to optimize and personalize patient treatment. Players can access the latest video games instantly, without even leaving their living rooms. 

Cloud services add a lot of convenience to our lives, and enable useful tools we couldn’t even have dreamed of a few decades ago.

Servers in a Google datacenter facility
Google, Amazon and Microsoft run about two-thirds of the world’s cloud computing services.

Why does cloud computing use so much energy?

The cloud is, in its physical form, millions of remote data centers located all over the world and owned mostly by big tech: Google, Amazon and Microsoft run about two-thirds of the world’s cloud computing services.

These data centers, many sprawling the size of football fields, are filled to the brim with servers that run on electricity. These machines also produce a lot of heat and need to be constantly cooled to prevent overheating, which yes, uses even more energy (and water).

What is the carbon footprint of the cloud?

Keeping tabs on the exact amount of emissions is tricky.

The information is either unavailable or released in aggregate. For example, we don’t know Amazon’s carbon footprint from their cloud services (they are the largest cloud provider in the world), because the company reports its environmental footprint as one global operation.

We do know that the more complex a cloud task or service, the more processing power it entails, and the more energy it uses. So much so that, according to Reuters, Tesla has been criticized by heavy-hitting investors for its investment in Bitcoin as it contradicts the auto company’s environmental image. 

(And in fact, in May 2021, Elon Musk announced that Tesla would no longer accept Bitcoin as payment, due to its “rapidly increasing use of fossil fuels”.)

Simply processing the cryptocurrency’s transactions takes an exorbitant amount of energy.

What is Bitcoin, and why does it have such a big carbon footprint?

A crypto trader using a laptop and mobile phone to see the price of Bitcoin
Bitcoin is a digital currency that can be bought, sold and exchanged without an intermediary.

What is Bitcoin?

Put (very) simply, Bitcoin is a digital currency that can be bought, sold and exchanged without an intermediary (read: a bank or government). These digital files are made up of private codes and can be stored in digital wallets on a phone or computer.

Why does Bitcoin consume so much energy?

Each Bitcoin transaction is recorded in a publicly accessible list called a blockchain, a digital ledger made up of a body of data that contains information about the transaction. The data (called a “block”) is stored and linked in chronological order (hence the “chain”). With each transaction, a verification process is required, one that uses cloud-related technologies — and takes an incredible amount of computing power.

What is the carbon footprint of a Bitcoin transaction?

According to Digiconomist, the CO2 emissions required to process a single Bitcoin transaction equal roughly 1,648,475 Visa transactions or 123,963 hours of YouTube.

Why is energy needed to mine bitcoin?

There’s also the process of “mining” Bitcoin, which involves solving incredibly complex puzzles using massive amounts of computing resources in order to complete blocks of verified transactions. (It’s a lot to wrap your head around; we’ve definitely oversimplified it.) 

“Miners” are then rewarded for their work with Bitcoin tokens. It’s a long, arduous process that takes a lot of energy. Most mining takes place in southwest China where power is cheap — and also largely coal fueled — and there is no carbon tax.

The CO2 emissions to process a Bitcoin transaction equal roughly 1,648,475 Visa transactions or 123,963 hours of YouTube.

As journalist Lionel Laurent explains for Bloomberg, “this is virtual money with a real carbon footprint.”

How can companies reduce their cloud computing reduce carbon emissions?

There are many ways that data centers can run “greener”.

1. Improve the efficiency of their data centers

In a 2019 Wired article rating the level of greenness of Google Cloud, Amazon Web Services (AWS) and Microsoft Azure, three metrics are broken down: infrastructure efficiency (think lights and cooling), server efficiency and electricity sources.

You can bet that the tech giants that dominate the cloud computing industry ensure that their data centers operate as efficiently as possible. After all, less energy consumed equals less dollars spent, equals higher profits.

A highly optimized server rack at a data centre

So, they automate everything possible — virtual machines to limit server downtime, high-density storage, turbo-speed networking, custom airflow systems, and other innovations — in order to run their centers using the least amount of energy. 

Google uses AI (Artificial Intelligence) to reduce cooling costs and optimize energy efficiency. Amazon uses recycled water for cooling. Microsoft even launched an underwater data center to reduce cooling costs. (Yes, really: check out Project Natick.)  

Thanks to RECs, Google & Microsoft can declare their centers 100% run by renewable energy despite being still partially connected to the grid, which uses fossil fuels.

Google, Amazon and Microsoft have also all committed to eventually decarbonizing their data centers. In the meantime, they depend pretty heavily on carbon offsets and renewable energy credits (RECs) to balance out their footprint. 

2. Decarbonize data centers and purchase carbon offsets

Thanks to RECs, Google and Microsoft can declare their centers 100 percent run by renewable energy despite being still partially connected to the grid, which uses fossil fuels.

Regardless, the Big Three are among the largest purchasers of renewable energy in the world. That certainly counts for something.

Could cloud computing actually help fight climate change?

As our demand for computing power increases, as well as the complexities of processing — take the demands of Bitcoin authentication and mining as just one example — the concern, obviously, is that our digital carbon footprint will grow in tandem. 

All those little files we store and online transactions we make add up, and as with everything, there’s a strong case to be made for reducing waste (aka deleting all those family photo outtakes and ancient email newsletters) whenever we can.

On the other hand, as computing power has moved from clunky in-house servers (run in large part by non-tech corporations) to cloud-based services, our increasing demand is being met much more efficiently.

Over a decade ago, the large majority of data center computing happened in smaller, on-site computer centers. By 2018, utility-style cloud data centers accounted for nearly 90 percent of data center computing; data center output increased six hundred percent from 2010 to 2018, with power usage only rising six percent.

When companies move from their in-house servers to the cloud, they are undoubtedly saving on energy consumption.

The Big Three’s determined pursuit of optimization means that when companies move from their in-house servers to the cloud, they are undoubtedly saving on energy consumption. That, combined with their commitment to renewable energy and total decarbonization, all add up to a softened environmental impact. (And we didn’t even get into the potential to go paperless. As cloud use becomes more prevalent, companies can move away from their dependence on paper.)

Clearly, we’re not about to up and quit the internet.

And the magic on our screens is going to get even more enchanting, more incredible and more elaborate (read: we’re going to need more processing power).

As long as the big tech players continue on their green journey and continue to develop energy optimization and environmental innovations; as long as education around the impact of our digital carbon footprint continues and consumers demand transparency and environmental consciousness, there’s hope.  

And that’s not magic. It’s progress.

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Lauren Jerome
Written By
Lauren Jerome

Lauren Jerome is a writer, editor and content planner covering a wide variety of topics – from personal finance and sustainable living to food, drink and travel. She lives in Toronto, Canada.

This article offers general information only and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada, RBC Ventures Inc., or its affiliates.

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