What Are The Environmental Impacts Of Cryptocurrency?

Lots of people are interested in cryptocurrencies such as Bitcoin. However, there is a huge issue with the crypto market – mining cryptocurrency uses up a lot of energy and has a big impact on the environment. Although mining is only one of the methods available for validating crypto transactions and minting coins, it is the main method that is used by the two top cryptocurrencies: Ethereum and Bitcoin. If you are interested in cryptocurrency but want to be more informed on the impact that it has had and is having on the environment, here’s what we know so far.

How Much Energy Does Cryptocurrency Consume?

While the good news is that buying cryptocurrency through a crypto platform and then using it for things like playing at an Ethereum casino will only use the energy that you’d normally be using to power your computer and your internet connection, it’s important to understand the energy consumption that is going on behind the scenes to make this available to you in the first place.

While there is no simple way to figure out exactly how much energy Bitcoin and other cryptocurrency mining uses, the estimated figure is that currently, crypto mining uses more energy than the entire countries of Finland and Belgium or about 218 Terawatt-hours (TWh) of worldwide energy production.

Why Does Crypto Mining Require Energy?

If you have looked into raising funds for a crypto business that involves mining, you will know that it requires a lot of energy. Since mining Bitcoin is an automated process that is required to validate Bitcoin transactions without the need for third-party interference, the high consumption of energy is a main feature of the market. The whole process of validating Bitcoin transactions is designed in a way that will consume large amounts of energy, as the network relies on the computing power of thousands of powerful mining machines. This ensures and maintains cryptocurrency’s security.

The Carbon Footprint of Cryptocurrency

Determining the cryptocurrency industry’s carbon footprint is even more complicated than figuring out how much energy it consumes. While the main energy source in the majority of countries where crypto mining takes place are fossil fuels, there’s no denying that crypto miners will typically look out for and use the cheapest energy option available in order to remain as profitable as they can. For lots of miners, this could mean relying on newer, alternative, and more sustainable energy options such as solar panels and wind energy.

It has been estimated that the Bitcoin network alone generates over 70 tons of carbon dioxide annually, which is around equal to the amount that is generated by the entire country of Turkmenistan. University of Cambridge researchers found that the countries with the biggest impact are the US, China, and Kazakhstan, which are the countries with the most Bitcoin mining operations.

Electronic Waste Impact

Along with the huge energy use that comes with mining cryptocurrencies, the process also generates a significant amount of electronic waste, with mining hardware wearing out quickly and or no longer being the right tool for the job. This is particularly true in the case of Application-Specific Integrated Circuit miners; machines that are designed specifically for the purpose of mining popular cryptocurrencies like Ethereum and Bitcoin.

Over 30 thousand tons worth of electronic products is wasted by the Bitcoin network on an annual basis.

Could Cryptocurrency Become More Environmentally Friendly in the Future?

Huge-scale crypto mining operations are typically located where reliable energy can be accessed in abundance and at a reasonable price. And, there may be a less energy-intensive way to process and validate crypto transactions, along with minting new crypto coins. There are other alternative methods, such as a proof-of-stake method which does not use huge amounts of computing power.

Other, less energy-intensive methods such as proof of elapsed time, proof of capacity, proof of burn, and proof of history are also in development. However, while Ethereum and other cryptocurrency developers are aiming to do away with the energy-intensive proof-of-work mechanism, there are no such plans for Bitcoin as yet. Since Bitcoin is still the most well-known and purchased cryptocurrency, it may be a while before the industry can reduce its carbon footprint in a significant way.

While increasingly popular, Bitcoin and other cryptocurrencies use a tremendous amount of energy, and understanding the environmental impact of this market is crucial.