Did you know that Bitcoin produces roughly 22.9 million tons of CO2 emissions yearly? Many people are unaware of the large amount of crypto and blockchain energy consumption that comes with this technology.
However, is crypto terrible for the environment? And can it ever change? If you want to find out the answer to these questions, and more, you’re in the right place.
This article will show you everything you need about crypto energy consumption and its future. Let’s get started!
What Are Cryptocurrency and Blockchain?
Before we begin, we must first learn cryptocurrency and blockchain technology. Unlike traditional currency, which typically has some physical coin or note, cryptocurrency is entirely digital.
While Bitcoin was the original cryptocurrency, thousands more were introduced since its start in 2009. Being entirely digital isn’t the only way cryptocurrency differs from traditional currency.
It’s also issued and created in an entirely different way. Typically either central banks or governments will control the production of money. With cryptocurrency, the people own the circulation of new money.
This is done using blockchain technology. Blockchain refers to a network of volunteer computers. Each one comes with an open-source code that acts as a digital ledger.
Every transaction is recorded on this ledger which makes it impossible to change. This makes it next to impossible to commit forgery using blockchain.
So, blockchain is what makes it possible for cryptocurrency to be decentralized. This means that no one entity controls it. Instead, it relies on the network of volunteers to support it.
Why Is Crypto Bad For the Environment?
By themselves, cryptocurrency isn’t inherently bad for the planet. What does make them problematic is cryptocurrency mining. Remember how we mentioned that no central authority could create a cryptocurrency?
Well, mining is the way that crypto creates new coins for usage. Here’s how it works. The miner will use their computer to solve a string of random letters and numbers equaling sixty-four digits.
When this complex riddle is solved, the miner gets rewarded with new crypto coins or other types of currency. The problem is that this has incentivized many miners to get more powerful computers.
In some cases, they have entire warehouses full of computers devoted to solving these complex riddles. This uses a lot of electricity, which is often supplied by nonrenewable resources.
And, as we likely all know at this point, nonrenewable resources contribute to greenhouse gases which hurt our ozone and rapidly progress the onset of global warming.
It’s important to note that this isn’t limited to cryptocurrency. It’s true of any technology that uses blockchain.
For example, NFTs (non-fungible tokens) are similar to crypto because they’re also stored on the blockchain. However, NFT energy consumption uses up to ten times as much energy.
What Does the World Get Wrong About Blockchain Energy Consumption?
The world often gets two main things wrong when they hear about crypto energy consumption. First, criticism of energy consumption often comes without a discussion of the other types of currency out there.
Think about it. The only electricity that cryptocurrency uses comes from computers. However, traditional banking is often much worse for the environment. How?
First, there’s all the technology, like ATMs, computers, and security systems that banks use. All of these take a lot of energy to power. And that doesn’t even include all of the resources that go into the physical assets.
Paper money requires trees to supply the raw resources and energy to print out. Similarly, gold, silver, and coin material all require mining operations that can harm the earth.
Crypto isn’t perfect. But, it shouldn’t be compared to traditional currency unless you also include how damaging this type of money can be to the environment. And that’s not including the transportation costs that come with them.
Second, crypto mining isn’t likely to experience runaway growth. So, while it is currently contributing to a negative environmental impact, this won’t last forever. It’s built into the structure.
Is A Green Crypto Future Possible?
The answer is yes! Crypto technology can be environmentally sustainable in the future. But, that all depends on the ways we produce electricity. For the time being, most electricity in the United States is produced using fossil fuels.
A carbon tax would be a great incentive for many companies to switch to more renewable energy sources. We would see a lot more solar and wind energy installations if it hurt the bottom line of many companies.
There should also be a focus within the crypto community on methods of mining that use less energy. Crypto mining is an excellent reason many companies switch to nonrenewable energy sources.
Think about it. Mining will always require energy. But, if solar and window energy is cheaper than fossil fuels (which it currently is), more miners will switch over to it.
So, crypto could help the planet become more reliant on green energy. Check out this article if you want to learn how a crypto green future is possible.
Appreciate Learning About Blockchain Energy Consumption? Keep Exploring
We hope this article helped you learn more about crypto and blockchain energy consumption. As you can see, energy consumption, and corresponding pollution, are an unfortunate byproduct of crypto mining.
But, allow us to tell you that it doesn’t have to be this way. There are already initiatives and companies that are devoted to carbon-neutral blockchain practice.
So, the future is looking brighter for crypto. Enjoy learning about this topic? There are hundreds more like them on our site so keep reading to find them.