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Cryptocurrency and the Climate

By Devanshi Parikh


Cryptocurrencies are digital assets and decentralized systems that allow for secure online payments. Crypto has the power to change our world for the better in many ways. It can provide unbanked people with digital wallets, prevent fraud, and replace outdated systems with more efficient ones. But, we still need this new and improved world to be one that we want to live in. Cryptocurrencies require vast amounts of energy consumption to function. Last year, cryptocurrencies used more power than 159 individual nations including Uruguay, Nigeria, and Ireland. Unsurprisingly, this is creating a huge environmental issue.


One of the most significant flaws of a cryptocurrency system is the enormous amount of energy necessary to mine the coin. When this energy is supplied from non-renewable energy sources, cryptocurrencies like Bitcoin can generate exorbitant greenhouse gas emissions. Mining for Bitcoin or any proof-of-work (PoW) cryptocurrency is meant to take a lot of energy, just like mining for physical gold. The need for both expensive hardware and sufficient electricity to power it creates entrance barriers, making it exceedingly difficult for a small group of miners to gain control of an entire crypto network. Miners employ vast quantities of computer power to operate and maintain the security of a cryptocurrency network in place of any centralized authority. Bitcoin mining, according to Digiconomist, emits around 96 million tonnes of carbon dioxide every year, which is comparable to the emissions produced by several smaller countries. Mining for the cryptocurrency ‘Ethereum’ emits more than 47 million tonnes of carbon dioxide each year! Cryptocurrency mining also produces a substantial amount of electrical trash due to the rapid deterioration of mining hardware. The Bitcoin network, according to Digiconomist, generates almost 30 thousand tonnes of electronic garbage each year. In conclusion, cryptocurrency mining has a significant impact on global warming and climate change.


However, recently companies are trying to be more sustainable. Many new initiatives are launching to decarbonize block chains by promoting the use of more energy efficient validation methods, pushing for proof of work systems to be located in areas with excess renewable energy that can be tapped, and encouraging the purchase of certificates to support renewable energy generators, similar to how carbon offsets support green projects. More corporations joining projects like this would make the crypto market much more sustainable, eventually leading to the use of renewable energy and pushing it closer to adoption as a legal tender. In conclusion, the cryptocurrency industry should acknowledge and address these environmental concerns immediately, work in good faith to reduce the carbon footprint, and ultimately demonstrate that the value and benefit cryptocurrencies provide is worth the resources required to sustain it.



Sources

Carter, Nic. “Top 25 Quotes on Bitcoin Impact on the Environment.” Moguldom, 24 May 2021, moguldom.com/354227/top-25-quotes-on-bitcoin-impact-on-the-environment/.

Cho, Renee. “Bitcoin’s Impacts on Climate and the Environment.” State of the Planet, 20 Sept. 2021, news.climate.columbia.edu/2021/09/20/bitcoins-impacts-on-climate-and-the-environment/.

Livni, Ephrat. “Can Crypto Go Green?” The New York Times, 10 Oct. 2021, www.nytimes.com/2021/10/10/business/dealbook/crypto-climate.html.

Reiff, Nathan. “What’s the Environmental Impact of Cryptocurrency?” Investopedia, 26 Aug. 2021, www.investopedia.com/tech/whats-environmental-impact-cryptocurrency/.

Singh, Rahul. “COP26: How to Make Cryptocurrency Sustainable.” World Economic Forum, 15 Nov. 2021, www.weforum.org/agenda/2021/11/how-to-make-bitcoin-and-cryptocurrency-sustainable-renewable-energy-blockchain-crypto-mining/.

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