Cryptocurrency and the environment, what is the deal?

Almost everyone has heard of cryptocurrency, many people have heard that it is bad for the environment. But how many of us know exactly how bad it is?

What is cryptocurrency?

Cryptocurrency is a digital payment system that does not rely on a central system such as a bank. This allows for anonymous payments and international payments without transaction fees.

The process of obtaining new crypto into circulation involves a process known as “mining”.

How does mining work?

Bitcoin is mined by “miners” who solve codes, known as “hashes” to verify the bitcoin transactions. This is known as “proof of work” and allows the transactions to be verified without the need of central system.

What about the environment?

The main issue with mining for cryptocurrency is how energy-intensive proof-of-work can actually be. It is said that the average transaction requires 1700kWH of energy. The industry as a whole uses as much energy annually as countries such as Malaysia or Sweden.

Bitcoin mining also produces masses of electronic waste. It is estimated that the average lifespan for a device mining bitcoin is 1.29 years, as devices used for mining quickly become obsolete. Mishandling of E-waste can result in leeching of toxic chemicals into the soil and water

Can cryptocurrency be environmentally friendly?

Some smaller cryptocurrencies take pride in being more environmentally friendly than bitcoin. The use of energy sources that are not fossil fuels is one way that other cryptocurrencies are working towards less carbon emissions eg. Solarcoin is a cryptocurrency that produces 1 Solarcoin per 1 MWh of energy produced.

Other currencies such as Chia and IOTA are using alternative forms of obtaining coins rather than the proof of work and mining methods.

More than 45 companies and individuals have also signed up to the Crypto Climate Accord, which works to decarbonise the crypto industry.

Do you think there is a future for green cryptocurrency?

Sources

https://www.sciencedirect.com/science/article/pii/S0921344921005103#abs0002

TheTimes.co.uk

Investopedia