How Cryptocurrencies are Impacting the Environment | Infographic

Is Cryptocurrency Too Hot for the Planet to Handle?

Bitcoin. It seems like it’s everywhere nowadays.

More retailers are accepting cryptocurrencies as a form of payment, and you can’t scroll through social media without seeing a discussion about it.

One aspect of cryptocurrencies getting a lot of attention lately is their impact on the environment.

Even well-known proponents like Elon Musk have voiced concern about the amount of energy cryptocurrencies require.

Wanting to better understand the impact on the environment, entertainment site CasinosBlockchain mined the internet for relevant information from trustworthy sources.

They distilled their research into an informative and easy-to-understand infographic about how cryptocurrencies are impacting the environment.

We’ll discuss the more salient points here, but the whole graphic is worth a read.

Why it Matters

Among hot topics, climate change is right up near the top. We’re dealing with unprecedented “100-year” weather events every year. And climate change doesn’t only affect weather.

Soil erosion is having a devastating impact on agriculture.

With these issues top of mind, the way we use energy and the fuel we use to create energy are under heavy scrutiny.

 

 

How Do Cryptocurrencies Use Energy?

Cryptocurrencies—including Ethereum, Tether, Litecoin, and Bitcoin—are digital, meaning there is no physical form of cryptocurrency.

Unlike traditional money, cryptocurrency is neither created nor backed by any government.

It’s data that is encoded and then “mined” by other computers that complete a set of complex problems to decode the data (known as Proof of Work).

Generally, the computer that completes the “puzzle” first earns the digital coin.

All that computing uses energy.

A Cambridge University study claims that if Bitcoin were a country, it would be among the top 30 energy users worldwide.

It states that the amount of energy required to power the cryptocurrency is equal to 0.52% of the planet’s energy consumption.

But in the Grand Scheme, How Detrimental is it to the Environment?

That’s a little tougher to pin down.

Since cryptocurrencies like Bitcoin are decentralized, no one really knows where it’s being mined or whether the energy it uses comes from fossil fuel.

There is a consensus forming that believes most Bitcoin miners are based in China, a country notorious for its use of coal and fossil fuel.

That doesn’t mean that ALL cryptocurrency relies on these sources of energy.

Decentralization means that Bitcoin is also mined by computers powered by sustainable, renewable energy sources.

The Cambridge Centre for Alternative Finance estimates that, even if Bitcoin was mined solely using coal-powered resources, it would contribute just 0.17% of Earth’s CO₂.

So, while it’s not insignificant, cryptocurrencies can be more responsible about the way they use renewable energy sources.

But What About Traditional Currency?

Paper currency and coins don’t get a free pass here.

Many “paper” currencies are partially or entirely made from cotton, which is an extremely thirsty crop. Just one kilogram of this crop uses more than five thousand gallons of water.

And coins are made from non-renewable materials.

And these centralized currencies flow through financial institutions and retail stores. All of which use computers.

So, Can Cryptocurrency be Environmentally Responsible?

Ethereum is pledging to cut its energy use by using a less power-intensive mining system, known as Proof-of-Stake (PoS).

Others, like SolarCoin and BitGreen, incentivize miners to use renewable energy and take other eco-conscious actions to earn currency.

While getting to 100% sustainability probably won’t happen anytime soon, there are cryptocurrency backers that are moving toward a greener future.