No doubt, the cryptocurrency market is no longer where it was ten years ago. As of 2011, Bitcoin was valued at just $1. Today, it’s approximately $62,000, and by the next minute after reading this, it might have gone higher. Cryptocurrency investors are becoming millionaires overnight, leveraging the right strategies and understanding the working of the market. The popular notion is that once you buy Dogecoin, Bitcoin, or any other cryptocurrency, you are one of the rich people.
Unfortunately, the planet can’t seem to keep up with cryptocurrency’s increasing popularity. Individuals, businesses, and even countries are adopting digital currencies as legal tender. However, with crypto mining activities, several discussions have been raised about its impact on our environment.
How exactly is cryptocurrency affecting the environment? Energy consumed by cryptocurrencies like Bitcoin and Ethereum during the mining process is enormous. And the world’s ability to stave off the negative impacts of climate change dwindles day by day.
How Cryptocurrency Is Circulated
To understand cryptocurrency’s impact on the environment and climate, you need first to understand how it is mined and distributed. Most cryptocurrencies are mined into circulation. A new cryptocurrency is mined to validate the previously existing ones and record new blockchain transactions.
As opposed to when you buy Dogecoin, every demand for Bitcoin means more Bitcoin is being mined. And the more Bitcoin is mined, the more energy is consumed.
Cryptocurrency mining is said to consume a large amount of energy more than some countries consume yearly. It is impossible to tell just how much because each system uses different levels of energy. But there’s a huge competition in cryptocurrency mining resulting in more requests for systems with bigger energy-sapping capabilities. Hence, more energy consumption for every mining activity completed.
Environmental and Climatic Impact of Cryptocurrency
So much value the cryptocurrency market had acquired over the years from when it was introduced many years ago. So much good fortune it has brought to many and loss to others who have been impulsive about it.
But can the environment be as appreciative? No, because with an increase in the need for cryptocurrency mining comes an increase in the environment’s danger.
Bitcoin mining alone consumes energy of about 707 kWh per transaction and over 100 terawatts per year. This is more energy than all of Argentina consumes, and it gets worse every day.
In addition, rewards are cut in half, so miners have to mine as much cryptocurrency as possible to make an effort worth it. As such, they need to find cheaper sources of electricity and upgrade to a higher, more stable, faster, and energy-consuming computer. But less than 40% of this energy is gotten from a renewable source. And that 40% is mostly from hydropower, which is potentially harmful to the environment.
Besides energy consumption, there is also the issue of non-fungible tokens. NFTs are digital files with strings of codes. Ethereum creates the NFTs, and it is said to have a very high carbon footprint. Its carbon footprint is more than an average EU citizen’s electricity consumption in a month.
Last but certainly not least, cryptocurrencies like Bitcoin and Ethereum are reported to contribute to the problem of e-waste the world is already facing. And that is not in minute quantities. For example, the Bitcoin network is said to generate 11.2 tons of e-waste each year.
The Place of Greener Cryptocurrencies
Although the majority has negative impacts, several cryptocurrencies have few climatic consequences. That is, other than what the world is already facing. Dogecoin, EOS, and Cardano are examples of greener cryptocurrencies that pose less damage to the environment. Because these cryptocurrencies are not mined, they use the same amount of energy a computer uses to carry out transactions. As a result, there are fewer carbon footprints on the environment.
Worthy of mention is that high-energy-consuming cryptocurrencies like Ethereum and Bitcoin are also planning to upgrade to a proof-of-stake blockchain that uses less energy. This might not be an easy transition, but when completed will help reduce the negative impact of cryptocurrencies on the environment.
You are free to buy Dogecoin or Bitcoin, or any other cryptocurrency you fancy. Cryptocurrency has been improving the financial lives of many for as long as we know. Notwithstanding the benefits, some of these crypto-assets have a negative influence on the climate. The impact may vary from one crypto to another, but the fact remains that mining, including cryptocurrency mining, is one of the quickest ways to release carbon into the environment.