Is cryptocurrency bad news for the environment? Yes. Yes. All economic activity has an environmental impact. But how can cryptocurrency be worse than other forms?
This article gives an overview of cryptocurrency’s footprint, and discusses possible environmental improvements-some of which we are already witnessing in the industry.
What is Cryptocurrency?
Cryptocurrency is money that exists only in digital form. Bitcoin is the most well-known and original. It is made up of bits of data stored in Blockchainsnetworks of computers with an open source copy of the entire cryptocurrency’s transactions ledger. This makes fraud and forgery virtually impossible.
Cryptocurrency and its environmental impacts
The problem with cryptocurrencies is the energy they consume. Crypto-mining accounts for most of the energy consumed by cryptocurrencies. This is where computers are used to solve increasingly difficult 64-digit random numbers and letters.
The first miner to solve this riddle is rewarded with new bitcoins or other currencies. This can earn the miner hundreds and thousands of dollars. This has led us to a Gold Rush-like pursuit of faster and more powerful computers, and greater energy consumption.
Bitcoin mining alone accounted for an estimated $18 billion in 2021 121.36 terawatt-hours(TWh) More electricity than Argentina, or approximately what is used annually by vampire power in America.
One of the most influential 2018 articles in Nature Climate ChangeBeware, Bitcoin emissions alone could cause global warming to exceed 2 degrees Celsius(The article was criticised for not adequately accounting the different sources of electricity Bitcoin mining utilizes, Estimated 50% These are renewable. The energy requirements of cryptocurrencies has become a major concern, prompting a hearing in Congress. Cleaning up Cryptocurrency – The Energy Impacts Of BlockchainsIn January 2022.
What about NFTs, you ask?
Crypto vs. Traditional Currency vs.
Many critics of cryptocurrency are made without comparing it to other forms money. Unlike the rest, cryptocurrencies have few other energy costs than computers. There are no banks, no printing money, no mining gold or other metals for coins, and no transportation costs.
The traditional banking sector emits a Estimate1,368 Megatonnes of carbon (Mtoe) are produced each year. Gold mining produces another 144 Mtoe. Bitcoin mining generates about 61 Mtoe annually. However, traditional banking services are much more extensive and can conduct far more transactions than cryptocurrency.
While it is difficult to estimate the carbon footprint of the entire economy, it is easy to identify the footprint of cryptocurrency and, perhaps, to improve.
Can Crypto be Sustainable?
Cryptocurrencies can be described as electronic equipment and electricity consumption. It is possible to make cryptocurrency more environmentally friendly than other parts of the money economic system.
Cleanup electricity production and reduction of e-waste is the best way to improve cryptocurrency’s environmental impact. To reduce the carbon footprint of cryptocurrency, a carbon tax on fossil fuels is more effective than any other method.
The cryptocurrency world is trying to make its act more green without a carbon tax. Part of this involves developing less energy-intensive forms to crypto-mining. The document has been signed by many miners Crypto Climate AccordsThey pledged to make their currencies net-zero by 2030, and to decarbonize the entire sector by 2040. Elon Musk, Tesla CEO, pressed the participants. Bitcoin Mining CouncilThe organization was created to encourage transparency in crypto-miners energy consumption and to pressure them to use more clean energy.
Decarbonization is also driven by the nature of the business. Crypto-mining’s largest cost is energy, so crypto-miners shift their operations to areas where energy is cheaper, just like data centers. Get solar energy now The cheapest type of electricityHistory is a record of wind power, so the more we decarbonize electricity production, the better and cheaper crypto-mining will be.
Curtailment: A Must
The installation of clean energy is being driven by crypto-mining. This means that electricity is cheaper when it is reduced to what is absolutely necessary.
China cut 41.9 terawatthours (TWh), of wind electricity, and 7.3 trillion watt-hours of solar electricity in 2017, more than the amount of electricity that was consumed by Bitcoin mining.The opportunity is global: California alone will curtail cannabis production in 2020 1.5 TWhSolar electricity.
John Belizaire is a developer of green data centres for cryptocurrency mining. Testified in front of CongressExplained: When crypto-miners buy renewable electricity that would otherwise have to be curtailed they lower their own costs as well as increase the profits for renewable energy developers. This encourages more investment into renewables.
Electricity production is being decarbonized more quickly than any other sector of global economy. This is why climate activists insist that everyone be electrified as a key step to combating climate change.
Cryptocurrencies are an energy-intensive sector at the moment. It is much easier to decarbonize an industry already close to 100% electrified than one not.