The Environmental Impact of Cryptocurrencies: Debunking Common Myths

 Most recently, the second largest cryptocurrency by capitalization, Ethereum, switched to a new PoS consensus algorithm, or staking. The cryptocurrency community is divided into two camps: supporters and opponents of mining. The latter claim that mining and high electricity consumption harm the environment. But is it really so?

Why do you need mining

The entire history of cryptocurrencies began with bitcoin, a decentralized electronic cash powered by blockchain technology. There are no central banks or other printing presses for money in the Bitcoin system. People exchange funds with each other directly, and all information about these exchanges is recorded in the blockchain. So, it is the miners who, as a result of their work, make these records and confirm the validity of transactions, thanks to which users can buy and sell in the store crypto. Strictly speaking, the system would not work without miners. Therefore, they are very important. At least in the Bitcoin system.

The miner acts as an independent third party that confirms the transfer, and a kind of bank that issued new bitcoins into circulation. To do this, he needs to solve something like complex mathematical problems with the help of special equipment. Since miners compete in the free market in the hope of being the first to get the coveted reward for the next block from the system, they are constantly increasing their power.

There are also equipment manufacturers. Mining of the same BTC is carried out mainly with the help of special ASIC solutions. These are devices that consume a relatively large amount of electricity, but are extremely efficient at extracting new coins. Each new generation of ASIC devices mines more bitcoins with less power consumption. But how much electricity is burned specifically?

Mining and ecology

According to various estimates, the annual BTC energy consumption index is from 100 to 200 terawatt-hours. Probably, this difference is explained by the interest of some research groups to present the process of mining cryptocurrencies exclusively in a negative light, while others — to whitewash it as much as possible. In general, the electricity consumption of bitcoin mining increases over time. This also follows from the indicator of the total network hashrate.

In 2021, representatives from the University of Cambridge found that Bitcoin's electricity consumption is about 120 terawatt-hours per year. The figure can be compared with the same consumption throughout Argentina.

Exaggerated problem

Interesting data is provided by the New York Digital Investment Group in a report for 2021. Researchers believe that by 2030, the share of carbon dioxide emissions from bitcoin mining will be less than 0.1% of the total emissions in the world. It is noteworthy that such a relatively low value, according to their forecasts, will be even if the capitalization of the crypto market reaches $10 trillion.

Carbon footprint

It is clear that bitcoin is an ambiguous thing, and there are a lot of people who use it with might and main and are not going to give up the conveniences that it offers with respect to conventional fiat currency. Therefore, BTC mining will not disappear in the coming years. But is it possible to somehow reduce the carbon footprint of its mining?

Already, many crypto enthusiasts are using renewable energy sources. Solar panels, windmills and much more allow you to get the necessary electricity for mining without unnecessary harm to the environment. The placement of solar panels in hot regions is especially popular.