Bitcoin has been around for 12 years. The ledger first started on 3 January 2009 and started booming in 2010. For those who don't know what bitcoin is, often referred to as crypto currency, is a decentralized digital currency which can be used to buy stuff and could be transferred from user to user, even if there is no central bank or administration. Simply speaking, bitcoin is an online version of cash. So, what could be so bad about it? What does it have to do with the environment if it's a digital currency?
How does it work?
First, we have to know how bitcoin works. As said before, bitcoin is a decentralized public ledger, which means they don’t have a single authority that controls them. In exchange, Bitcoin is constantly updated and operated by a network of computers around the world called “miners”. These so-called miners use purpose-built computers which allows them to solve complex math puzzles in order to allow transactions to go through – the only way to mint new bitcoins – in exchange for being rewarded a small fraction of the Bitcoins transactions.
How it impacts the environment
Over the last years, bitcoin’s price have increased significantly (also lows at some multiple occasions), leading to also the increases of total energy consumption due the minings. Also, since mining can provide a huge revenue to all those people, also called miners, they are willing to run a lot of power-hungry machines just to increase their gains over every bitcoin transaction they help approve. Thus, the bitcoin network now consumes more energy than some countries. Not to mention, bitcoin is not the only cryptocurrencies that did so.
In November 2020, the eastern coast of the Black Sea, Abkhazia, was hit by an overflow of electricity uses that exceeded the grid. It was said that the cause was actually a cryptocurrency mining farm. The blackout caused a ban on cryptocurrency almost immediately.
We also haven’t talked about the carbon footprint it leaves. Carbon footprint is the total greenhouse gas emissions caused by an individual, event, organization, service, place or product, expressed as carbon dioxide equivalent. Though, it is said that there is no accurate data of the carbon footprint, many use incomplete data of it. But, even if it is incomplete data, it is said that the carbon footprint of a single mined bitcoin is equivalent to 191 tonnes of carbon dioxide, while gold mining takes up to 13 tonnes of carbon dioxide, making bitcoin equivalent 50x more carbon dioxide produced than gold mining. This is because over 39% of the miners use fossil fuels, based on the University of Cambridge’s survey done in the spring of 2020. This data will keep on increasing as bitcoin’s prices increase, leading to a higher reward for mining, meaning more computers are produced in the network.
What has been/should be done?
Etherium, the second largest cryptocurrency, and some others have been trying to use a greener alternative, called proof of stake. So, what proof of stake essentially does is allocating blocks based on distribution of wealth rather than computational power. So, it is said that you don’t necessarily have to use said computational power that has been proven to ruin the environment, which people hope that bitcoin will follow suit.
“Frankly, if you look at the track record of proof of stake, it’s terrible with regards to centralization. What proof of stake actually means is if you control more wealth in the system, you have more political power. Virtually, all bitcoiners are adamantly opposed to it.” - Nic Carter, Castle Island Ventures Columnist, Coindesk
This proves to be a huge problem, since what we’re talking about is a community without anyone in charge, so you first need to get everyone or at least a huge amount of people to agree with you, before it is done.
Anotheralternative is to convince miners to use safer, more environmentally friendly fuels. The problem lies in convincing miners to leave cheap reliable power generally provided by fossil fuels. Sometimes, miners will try to negotiate with a power plant to get a cheaper price, often buying stranded energy, which otherwise could go to waste. Others try to take power from flared methane gas, an unused by-product from the oil company. It may be seen by some as an eco-friendly alternative but by critics, a perpetuating fossil fuels. There are even shut down fossil fuels plants reopening, just to power crypto mining.
Thus, the reasons as to why bitcoin is harmful to the environment. Now, lies the problem of whether bitcoin is worth all these impacts? What do you think about it, kepoers? Do you think it’s worth it? Or if you are a bitcoiners yourself? Will you still be using bitcoin after this? Or maybe you will take into consideration moving into the more environmentally friendly cryptocurrencies, such as etheriums?
Writer: Jessica A
Editor: Jessica A
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