You know those pieces of paper we use to symbolize currency and exchange for goods and services? Yeah, the days of physical money and banks are starting to dwindle as new forms of electronic currency, or eCurrency, are rapidly growing in popularity.
Most popular of these currencies are Cryptocurrency, more specifically, Bitcoin, which was the first to ever exist. The concept of cryptocurrency can be confusing, and unless you have a knack for technology, it may be difficult to grasp.
Simply, when we use government-issued bank notes and debit/credit cards, these transactions go through a centralized agency, which in our case, is the financial institution (the bank). Considering financial inequality is increasing worldwide, many people do not have access to banks or ATMs and are disadvantaged greatly by this.
Cryptocurrency was invented to help circumnavigate this issue. By cutting out the middlemen and replacing it with a “block chain”, which is essentially a peer-to-peer, decentralized electronic ledger, that can be used to track and confirm transactions. The blockchain is the fundamental technology behind Bitcoin and many other alternative eCurrencies. While this is all fine and dandy, what exactly does this have to do with the environment?
Let’s unpack this. Ever heard of cryptomining? The nature of the blockchain is such that the previous transaction is recorded in the next one, and so on and so forth, and since this isn’t physical money, there is a possibility that illegitimate transactions are made. Miners are basically the “auditors” of the blockchain, and with high-speed computers and graphic cards they are able to verify these transactions. Once 1 megabyte of transactions are verified, the miners are eligible to be rewarded with a certain quantity of Bitcoin.
These specialized computers are in a race to record new blocks, which can only be solved using cryptographic puzzles, and thus use up a lot of energy-intensive computations. Recent reports suggest that the increase in cryptomining has resulted in the Bitcoin network using as much energy in one year as the country of Argentina. It estimates that Bitcoin uses 143 terawatt-hours (TWh) of electricty per year, more than many countries and around 0.65 percent of worldwide electricity consumption.
Bitcoin already accounts for at least 20% of the energy consumption of the world’s data centers, and each Bitcoin transaction uses at least 491 kWh, dwarfing the 0.4 kWh or so required for a conventional electronic-banking transaction.
Furthermore, cryptocurrency mining generates a very significant amount of electronic waste (or eWaste), as specialized hardware becomes obsolete approximately every 1.5 years, with the Bitcoin network generating between eight and 12 thousand tons of electronic waste every year. Hopefully these facts will put into perspective the gigantic impact Bitcoin and cryptomining has had on our environment in the short 12 years it has been in circulation.
While Bitcoin, in theory, certainly has a long list of undoubtedly beneficial results for consumers around the globe; eliminating financial institutions and governing bodies from monetary management could save lives in places of corruption and inaccessibility. However, it should not have to come at the cost of our environment and livelihood on this planet.
Energy efficient alternatives are coming into fruition and individuals move their mining farms to obsolete areas and run exclusively on renewable energy like wind and solar. There is also talk of switching to from the current proof-of-work system, which involves constant computational power from the miners, to a proof-of-stake system, in which miners are selected at random not to mine the blocks, they just need to create blocks when chosen and validate proposed blocks when they're not.
By eliminating the competitive and intensive nature of cryptomining, individuals will be able to still participate while greatly reducing the amount of energy they must invest into mining.
Different, more energy-efficient forms of cryptocurrency exist that do not necessarily even require mining at all, such as Nano, which doesn’t use mining at all and has the smallest energy footprint in the market, using only 0.000112 kWh per transaction. Other examples are Cardano and Hedera Hashgraph which both greatly reduce the amount of energy consumption that goes into the sharing and management of that particular cryptocurrency.
The hype at around Cryptocurrency is certainly not slowing down anytime soon, and here at Eco Four Twenty we want to encourage readers and anyone who is considering opening a Cryptowallet to look closely into the coins they are considering investing in. What might make you $10 richer tomorrow might also severely damage our planet forever.