While the world battles with drastic climatic changes, it would seem the hot gold of today is not helping matters. The culprits behind climatic changes used to be fossil fuels and industrial pollution. However, today, the spotlight where climatic changes are concerned is turned on cryptocurrency.
Cryptocurrency mining, Bitcoin’s especially, takes an awful lot of energy to initiate and the mining rig, a lot also to sustain. While we cannot deny the profit we get when we buy Ethereum and others like it, we cannot but wonder how much that is costing the environment.
Largely speaking, this is why we have countries like China placing a ban on cryptocurrency activities in the country. While a lot of people find the idea of digital currencies a good innovation and others making a lot of money, there is a need to consider the danger or otherwise that it poses to our environment. This is important because environmental danger caused by cryptocurrency mining can affect our overall health and living conditions.
How Cryptocurrency Affects the Environment
The electricity needed for the cryptocurrency mining process is the most obvious impact the digital asset has on the environment. Most cryptocurrencies rely on mining for circulation. According to experts, Bitcoin mining creates nearly 96 million tons of carbon emissions every year. This number is equivalent to the quantity of energy smaller countries generate. Meanwhile, Ethereum mining generates over 47 million tons of carbon emissions yearly.
Moreover, Bitcoin currency was capped at 21 million units, and there’s already so much in circulation. Consequently, there are fewer Bitcoin units left to mine. Unfortunately, the fewer units left for mining, the more computational power is required to mine. Furthermore, Bitcoin generates enough electrical energy to power an average US household for about eighty days.
In addition, crypto mining produces a huge amount of electronic waste following the obsolescence of mining hardware. Experts say cryptocurrency generates nearly thirty thousand tons of electronic waste annually. Crypto mining requires the use of graphic cards, computers, purpose-built ASIC rigs, and others like them. As this brings lots of advantages, people constantly upgrade and do away with old equipment.
While there is a monetary consideration to the high energy cost of running and maintaining a mining rig, there is also the environmental implication. According to the opinions and predictions of experts, if steps are not taken immediately to address these concerns, either the growth of digital currencies or the environment will suffer in the long-term.
Why Cryptocurrency Uses So Much Energy
The decentralization of the cryptocurrency market comes at a cost; mining crypto has to be difficult to prevent one person or group from taking control over it. Cryptocurrencies like Bitcoin and Ethereum typically operate on a PoW (Proof of Work) system. The PoW system requires that people solve different levels of mathematical equations to mine new coins, adding new blocks of information to the blockchain.
Solving these equations comes with a reward, and the person with the best processing power has a higher chance of winning. As such, many people on the crypto network are clamoring to get that reward. Therefore, they put together large mining rigs to solve the equations faster. But, the larger the mining rigs, the more the energy consumed to mine coins.
In addition, electricity has a high price and strict availability today, which invariably affects the volume of crypto mining. This could be another reason cryptocurrency mining requires so much energy.
How to Manage Cryptocurrency Impact on the Environment
Surely, there must be ways to manage or reduce cryptocurrency’s impact on the environment to the barest minimum. There are considerable efforts geared towards making cryptocurrency greener, including using methane gas and setting up plants in areas with abundant wind power. However, these ideas are only good in theory; implementation might not be feasible, especially if Bitcoin price crashes.
Meanwhile, developers and miners are looking to move towards new crypto validation systems that aren’t proof of work. An example is the PoS (proof of stake) system, which depends on the amount of virtual currency a user agrees to hold or stake rather than sell. In addition to this are other validation methods like proof of history, proof of burn, proof of elapsed time, and proof of capacity. The goal is that these new systems won’t rely on extensive computational power or energy-intensive protocol like proof of work.
In conclusion, the measures being taken to reduce the impact of cryptocurrency on the environment have great potential to work. While some of these measures may be effective in the short-term, others may take some time. However, there is still the issue of e-waste and other environmental disturbances needing attention before crypto can become sustainable long-term.
* This article is not intended to represent financial advice or the opinions of the owners of this website. *