The Environmental Impact of Cryptocurrency

The conversations around the declining health of our planet are increasing, and that should alarm us all. It’s scary to think about how increasing temperatures will affect the human race.

This is why it’s crucial to take an in-depth look at how we each individually impact the environment and make changes to support a healthier one. For example, you may have implemented mobile wallets, debit and credit cards, electronic statements, and online banking instead of pen and paper methods for your finances. You may have gone a step further and invested in cryptocurrency to move in the direction of a cashless society that contributes to environmental health.

But as much as cryptocurrency seems like its impacts on the environment are entirely positive, there are critics out there who argue otherwise. Let’s look at six questions on the relationship between the current climate crisis and cryptocurrency that provide insight into how to move forward productively.

What Is the Current Climate Crisis?

The current climate crisis is unique because it’s happening due to human activities increasing the levels of greenhouse gases. These human activities include:

• Burning fossil fuels like coal and oil.
• Clearing of land for agriculture, industry, and other activities.
• Using technology.
• Driving gas-fueled cars.
• Farming livestock.
• Inefficient waste disposal.
• Cement manufacturing.
• Cell phone usage.
• Using excessive energy.

NASA reports that “The current warming trend is of particular significance because most of it is extremely likely (greater than 95% probability) to be the result of human activity since the mid-20th century and proceeding at a rate that is unprecedented over decades to millennia.”

Earth’s climate is responding to these changes in greenhouse gas levels by getting warmer. Gases such as carbon dioxide, methane, nitrous oxide, and chlorofluorocarbons in the atmosphere block heat from escaping and entering space like it needs to. Human activities like the ones above increase the release of these harmful gases into the atmosphere, preventing the Earth from running its natural cycle.

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Scientists have collected loads of data on our planet’s climate over the years. Rapid climate change is evidenced by the fact that:

• The ocean is getting warmer.
• Global temperatures are rising.
• Ice sheets are shrinking.
• Glaciers are melting.
• Snow cover is decreasing.
• Sea levels are rising.
• Arctic sea ice isn’t forming.
• Extreme weather events are taking place more frequently.

If we don’t effectively address the current climate crisis, it will continue to worsen over time, adversely affecting the Earth’s ability to house the human race. Earth will become warmer, and those conditions will lead to issues like:

• More evaporation and precipitation overall.
• An ice-free Arctic.
• Increasing sea levels due to partially melted glaciers and ice sheets.
• Stronger, more intense hurricanes.
• Ocean water expansion that further contributes to the sea level rise.
• Droughts, floods, and extreme temperatures.
• Crop losses due to climate extremes.
• Increase of weeds, pests, and fungi that thrive under warmer temperatures, wetter climates, and increased carbon dioxide levels.
• Instability for agricultural producers.
• Threats to worldwide food security.
• A reduction in the nutritional value of most food crops.
• A reduction in the concentrations of protein and essential minerals in most plant species.
• New risks for food security, food safety, and human health.

Now that we’re caught up on the current climate crisis, where does cryptocurrency come into play?

How Does Cryptocurrency Contribute to the Current Climate Crisis?

There is the misconception that making everything digital is the solution to many of our environmental challenges. This misconception carries over to the financial industry as well, with many people buying into a cashless society soon. Although cryptocurrency could be the future of finance, questions about its impact on the environment are becoming more apparent as time goes on.

We have to be careful about choosing digital platforms because they also negatively impact our environment. The Cambridge Bitcoin Electricity Consumption Index found that “Bitcoin accounts for 0.40% of the world’s total electricity consumption, and 0.34% of the world’s total electricity production, underscoring efforts to reduce the planet’s energy consumption and use of fossil fuels.”

According to Earth.org author Maheen Arshad, “A single Bitcoin transaction consumes more energy than 100 000 Visa transactions.” To further put this into perspective, Bitcoin is just one of the thousands of cryptocurrencies currently used. If we account for each cryptocurrency’s single transaction rate, we’re looking at tremendous energy consumption.

It also takes a tremendous amount of energy to power computers, software, and other technology needed to sustain and grow crypto markets.

Cryptocurrencies are regulated through blockchains. A blockchain is a “record-keeping” technology that employs a decentralized and distributed system of ledgers to store digital information. Each computer used in a cryptocurrency transaction becomes a permanent part of the public ledger used for tracking. These transactions are validated by a highly energy-intensive “mining” process conducted through high-powered computers.

As more cryptocurrencies emerge, they’ll also become more costly and time-consuming for miners to produce. We’ll need to create better computers, software, and technology to keep up with the changing nature of cryptocurrency, potentially increasing energy consumption.

What Can Be Done on a Systemic Level to Counteract This Trend?

Each of us has an individual responsibility to make our planet a cleaner, healthier, more productive place to live. It may not seem like being diligent about your recycling practices, reducing your waste, going car-free, and so on, matter. But these individual practices influence whether or not our planet thrives.

However, other necessary changes can only be made on a more extensive, system-wide basis. We’re making progress in requiring our leaders to prioritize policies that support the longevity of our planet with actions like:

• Getting rid of chemicals used in fridges and air conditioning to reduce emissions
• Reconstructing how we support the growth of energy and food industries
• Creating new guidelines for responsible farming practices, the best ways to clear land, and discarding waste
• Protecting natural resources and sacred lands
• Committing to eliminating carbon emissions
• Investing in renewable energy projects

Policymakers must extend these efforts, creating specific policies defining how we create, maintain, and use cryptocurrency. On a systemic level, we can counteract the trend of cryptocurrency being harmful to the environment by:

• Revamping how we track cryptocurrency transactions
• Setting up incentives for cryptocurrency companies that use renewable energy.
• Investing in projects that create energy-efficient cryptocurrency computers
• Creating policies around responsible cryptocurrency use
• Investing in research related to cryptocurrency

Is This an Opportunity to Further Invest in Renewable Resources?

Exploring the environmental impact of cryptocurrency absolutely gives us an opportunity to invest further in renewable sources. One of the biggest concerns with cryptocurrency is how much energy is consumed in its usage, maintenance, and efforts to scale the market. Investing in renewable resources can improve crypto’s energy efficiency.

As stated earlier, we all have a responsibility to improve our planet’s health, which requires a thorough look at our individual carbon footprints. One of the best ways to reduce the amount of greenhouse gas emissions is to be energy efficient.

Cryptocurrency companies can invest in renewable resources like wind and solar power, bioenergy, and hydropower, significantly decreasing energy consumption in their operations.

Should We Stop Investing in Cryptocurrency?

No longer investing in cryptocurrency may not be the solution. Suppose we’re moving toward a cashless society, becoming more and more accustomed to mobile wallets, contactless payments, and implementing cryptocurrency as a form of payment. In that case, we should be open to change.

Cryptocurrency is proving to be beneficial to the people using it and the companies creating it. So, ceasing its use may be more harmful than positive for our society. Instead, we should focus on implementing guidelines that promote responsible investment and use.

How Can We Move Forward With Cryptocurrency Amid a Climate Crisis?

To move forward with cryptocurrency amid a climate crisis, we have to address its main environmental concern: energy consumption. Mining uses more energy than what the world currently produces in sustainable energy. Any efforts we are putting into sustainability are undermined by the amount of energy it takes to mine cryptocurrency.

Cryptocurrency companies and individuals must keep energy usage low. Suppose we’re stuck with high-powered computers to mine cryptocurrency transactions for the time being. In that case, companies can start by managing the energy consumption in their warehouse or office spaces. This includes efforts such as banishing phantom energy draws, checking insulation, and turning off overhead lighting in empty rooms. There also needs to be constant research and the creation of software and technology that can make cryptocurrency energy efficient.

If we have to use high-powered computers to mine cryptocurrency, we must find an energy-efficient way to power those computers. We have to be mindful of our individual practices as well. If you’re invested in cryptocurrency, see how you can reduce your energy usage, keep up to date with trends, and implement suggestions for responsible use and maintenance.

Conclusion

The conversation around the environmental impact of cryptocurrency is a new one. Although going digital seems optimistic all around, even something like cryptocurrency can negatively impact the environment, mainly because of its energy consumption. We must turn these conversations into actionable plans that include reduced energy usage and renewable resources that help us move forward with cryptocurrency amid a climate crisis.

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