In the last 10 years, cryptocurrency’s demand has increased similarly to some trade commodities. Now the overall crypto market capital has reached more than three trillion dollars.
Bitcoin’s price at the start of 2022 was almost double what it used to be a year back.
Such price increase for the online currencies has given rise to many hysterical demands for differentiation between cryptocurrency hard forks and airdrops.
Motivating many people to invest in crypto without understanding and considering the collateral impact on the environment.
A lot of social activists have said that crypto is harmful to the environment and includes a huge carbon footprint.
Why crypto is bad for the environment?
1. The main environmental effect of crypto comes from the activities that are energy-intensive and are used for every transaction and to mine new coins.
2. The required energy differs between cryptos.
3. Some require very less energy whereas others such as the most famous Bitcoin are highly energy-intensive.
4. Each transaction of Bitcoin makes use of almost 2100 kWh which is roughly what any average household in the US consumes within 75 days.
5. If such energy gets supplies from any non-renewable energy source, cryptos such as Bitcoin will be generating excessive emissions of greenhouse gas.
6. The yearly carbon footprint of Bitcoin can be compared to 97.2 megatonnes of carbon dioxide released.
7. It is almost the yearly emissions of the entire country of Argentina.
Environmental effect of Bitcoin mining
1. Higher power of processing will increase all likelihood to guess the PoW solution that has incentivized some miners to form a mining pool or create some mining farm facilities.
2. Each miner in a mining pool has a power-intensive tool.
3. They simultaneously attempt at solving the puzzle.
4. Then they share all profits based on the effort or power of computing contributed by each miner.
5. A mining farm is one data center consisting of many ASIC servers running non-stop continuously mining Bitcoin.
6. These servers’ consolidation into a place will encourage a decrease in the consumption of energy.
7. The specialized ASIC hardware has been designed for using energy very efficiently.
8. The mining farms still need high electricity amounts for powering them.
9. Overall Bitcoin mining makes use of electricity of 91 TWH every year is almost 0.5 % of the electricity consumption worldwide and is more than the consumption of electricity.
By the entire of Finland yearly and almost seven times more than that consumed by Google every year.
Environmental impact of crypto on that the banking system?
1. The environmental impact of Bitcoin is less than that of the banking and financial sectors.
2. According to a report, Bitcoin makes use of less than half as much energy used by the total banking sector, whose highest consumption of energy comes from its huge data centers.
3. The energy consumption of cryptocurrency is hardly comparable to that of the financial system.
4. But it is crucial to note that as crypto has replaced traditional banking the energy it uses will not replace the energy consumption of the banking system but will be extra to it.
Are there any environmentally friendly cryptos?
1. Some cryptos have not been designed around similar mining creations like Bitcoin-like Chia, Nano, and Cardano.
2. Ethereum which is the second-largest crypto will be changing its system of PoW to a PoS system that will randomly select a person at one time for solving the block.
3. Thus it will decrease the consumption of energy by 99 %.
Conclusion
Other than contributing to the environmental deterioration and the global warming advancement towards the 1.5-degree level, crypto has resulted in some social side effects too.
Cryptocurrency mining is known to threaten fragile grids in energy in many countries whose infrastructure is unable to handle the activity of power-chugging.
Many cities in China, Iran, and Kazakhstan faced blackouts because of Bitcoin mining activities that left various people without heat and electricity even for days.
However, it is important to understand that crypto also comes with some positive impacts to support those who are disenfranchised by the worldwide financial system.
To reduce the wealth accumulation by the banking sector and serve as a store of value for individuals in countries that face rampant inflation.
Its decentralized nature protects such assets inherently from getting controlled or allocated by governments and thus can be strong tools for any political dissent.
