As more users use bitcoin and "forced work" difficulty increases what effect does this have ecologically? It is a silly question I know. I'm just comparing lets say value or effect of using computational power for protein folding vs bitcoin and curious if anyone has given or found some thought/exploration on the matter.
Blockchain.info reckons the network used 156.51 megawatt hours of electricity in the last 24 hours. This random physics page I googled up reckons a car driving at 40mph takes 100kW (so, 2.4 MWh in 24 hours).
So by these (very) rough figures, running the Bitcoin network takes about as much energy as driving 65 cars.
How many vehicles are used in the transportation of physical cash? Not to mention the energy costs of physically storing and securing cash. I'd say Bitcoin is almost certainly a net positive for the environment to the extent that it displaces physical cash.
Increase in difficulty does not make Bitcoin miners mine any harder, it just takes them a longer time to solve a block. Their power consumption per unit of time remains the same.
On the other hand, more miners joining the network and mining increases the difficulty. Correlation is similar, although causality is reversed.
So, what impact does the increased hashing speed (and thus increased difficulty) have on the ecology? Well, more resources (electricity, hardware) are used to create new coins. In return the Bitcoin network gets more and more secure from attacks.
But if you want to control the ecological footprint of Bitcoins, you should look into the USD/Difficulty ratio, that is how profitable mining is. Some miners operate on a tight margin, so getting that ratio lower would make them quit, and vice versa - get it high enough and people would want to mine with the least efficient hardware they can find.
To date, there has not been a single suggestion as to how to provide a work distribution system that is not centralized that would at the same time not be vulnerable to cheating.
In other words, it would be great if there was a way to not have to rely on sha256() hash calculations being done 9,000,000,000,000 times per second (the current hashing rate) and do something like folding instead. But nobody can envision a way to do this where if someone isn't following the rules they don't disadvantage everyone else. If there was a master node -- that would work, but with bitcoin, there is no master node.
An alt currency called Litecoin uses a different approach where GPUs don't give the miner an advantage but the the same concept of a proof of work useless for anything other than verifying the blockchain is the output.
It's a good question you're asking there. And the answer is plain simple : Bitcoin is definitely not environment friendly by design.
The reason is that it is designed to keep the output rate stable at 1 block every 10 minutes regardless the amount of computing power we give it. The more computers are working, the harder it become to solve a block.
This is a big concern for many (me first). If Bitcoin became THE money, financial groups will invest massive amount of money in mining and we will see humanity asphyxiated for crunching numbers. That would be the most ridiculous end of the world. :)
On the other hand, we can think of Bitcoin being the holly grail of money. Something that is available in a known limited in quantity (we don't know how much gold is on earth). It is far less virtual than the current moneys that are not tied to any physical value (gold) or limits and that banks are creating out of nothing. Bitcoin is certainly a way to get out of the actual system that led us to where we are : a world led by a minority that just care about their wallet and not about the future of earth.
I hope that we will find a Bitcoin alternative that require a limited amount of energy to run the system.