Author: Doumkou Stefani
Publication date: 26.06.2024
Cryptocurrencies provide users with decentralized control over funds and economic independence, enabling people to perform transfers quickly and at a low cost. However, are relatively highly volatile, bear investment risk and provide legal coverages for unlawful operations. Beyond these well-known positives and negatives, it is crucial to investigate and understand another significant factor, the environmental impact of cryptocurrency mining and transactions. In the following article we wil unmask the environmental cost that the birth of cryptocurrencies brings, with Bitcoin being in the spotlight.
The Energy-Intensive Nature of Cryptocurrency Mining
The specific characteristics of cryptocurrency mining include high energy consumption, mainly caused by Proof of Work (PoW)*, a consensus that is widely utilized by cryptocurrencies like Bitcoin. This process involves the use of complex mathematical problems to be solved through software involving Application-Specific Integrated Circuits (ASICs) or Graphics Card (GPUs), both of which are power hungry. The miners worldwide are also eager to pump up energy further in order to win more transactions and be rewarded. This process is quite electric power intensive, which has drawn environmental concerns on carbon emitting machines as well as stress on the local power networks.
Transition to Energy-Efficient Solutions
Some of the newer generation coins use the Proof of stake (PoS)** which significantly uses less power as mining capacities are distributed depending on the staked amount of coins. Some cryptocurrencies such as Bitcoin and Litecoin are relatively energy-consuming because of the PoW mechanism, while other such as Cardano, Algorand, and Solana use PoS and are therefore energy-efficient.
The Environmental Impact
As stated earlier, the process of creating a digital currency involves high electricity usage, which significantly impacts the environment. Much of this energy comes from coal , a particularly dirty source that releases large amounts of CO2 when burned. CO2 is a major greenhouse gas driving global warming and climate change. Statistical data reveal that bitcoin mining is responsible for 22-23 million metric tons of CO2 annually.
Bitcoin Mining's and Global Sustainability Efforts
The energy-intensive nature of Bitcoin mining conflicts with global sustainability goals like SDG 7 (Affordable and Clean Energy) and SDG 13 (Climate Action). These goals aim to promote sustainable energy and reduce carbon emissions. Key agreements, like the 2030 Agenda, the Rio Summit and the Paris Agreement, emphasize limiting global warming and increasing renewable energy use. Bitcoin mining’s high electricity consumption, often from non-renewable sources, undermines these objectives, highlighting the need for the industry to adopt renewable energy and improve efficiency.
Stakeholder Pressure for Sustainable Bitcoin Mining
Aside from the environmental impact, another factor pushing Bitcoin mining into a more sustainable solution is the stakeholders repulse from the currency, because of its unsustainable nature. Several companies, including Tesla and Greenpeace, have stopped accepting Bitcoin due to its high energy consumption and significant carbon footprint, highlighting environmental concerns as a key factor.
Current Sustainability Efforts
Bitcoin Mining is increasing its renewable sources with hydropower being the most utilized followed by solar and wind. According to latest data in January 2024, 54.5% of Bitcoin mining was powered by sustainable energy. Along with PoS, these are the efforts of cryptocurrency mining to become more energy-efficient and sustainable. Despite these positive steps, cryptocurrency mining, including Bitcoin, still falls short in fully mitigating its (own) environmental impact.
Conclusion
We are currently on a fast track to save what is left to be saved. Both civilians and organized governments are making concerted efforts to minimize energy consumption. It seems counterproductive and even foolish to witness the energy savings achieved in one area being offset by the excessive consumption in another, such as cryptocurrency mining. This contradiction highlights the urgent need to address the environmental footprint of cryptocurrency mining. Therefore, aligning the cryptocurrency industry with global energy efficiency and renewable energy goals is imperative. Adopting renewable energy sources and improving mining efficiency are critical steps toward ensuring that our efforts to save the planet are not in vain.
You can also read about:
Comments