Cryptocurrency and its Impact on the Environment

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ryptocurrency is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on a central authority, such as a government or central bank, to uphold and maintain it. Many cryptocurrencies are decentralized networks based on blockchain technology, which is a distributed ledger enforced by a disparate network of computers. . New cryptocurrencies are released through mining, which is the process of validating and recording new transactions within the blockchain. Miners must verify the validity of a number of bitcoin transactions which are then bundled into a block. This can include checking 20-30 different variables. The process of trying to come up with the right nonce that will generate the target hash is trial and error. With hundreds and thousands or more of computers churning out these guesses, some ethical concerns become the energy consumption and greenhouse gas emissions from crypto mining .

Origins

In 2008, an anonymous person under the pseudonym, Satoshi Nakomoto, published a paper titled "Bitcoin: A Peer to Peer Electronic Cash System". On January 3rd, 2009, Satoshi mined the genesis block of the Bitcoin blockchain. The Bitcoin protocol is open source code and has received contributions from numerous developers including, most notably, Hal Finney, Nick Szabo, and Gavin Andresen. In the years since, many other projects have been released that utilize Bitcoin's source code, as well as many other cryptocurrencies that have developed their own blockchain. These are known as altcoins.

Environmental Impact of Bitcoin

Bitcoin is thought to consumer 707kwH per transaction, and according to a University of Cambridge analysis, it is estimated that bitcoin mining consumers 121.36 terawatt-hours a year, which is more than all of Argentina consumes, or more than the consumption of Google, Apple, Facebook, and Microsoft combined . Between 2015 and March of 2021, Bitcoin energy consumption had nearly increased almost 62-fold, and only about 39 percent of this energy comes from hydropower, which can have harmful impacts on ecosystems and biodiversity. Many miners within the US are converting abandoned factories and power plants into large bitcoin mining facilities. One example of this is Greenidge Generation, which was a coal power plant, which has not been transformed into a bitcoin mining facility running on natural gas. AS it became one of the largest cryptocurrency miners in the United States, its greenhouse gas emissions increased almost 10x between 2019 and 2020. Globally, Bitcoin's power consumption has implications for the goals outlined in the Paris Accord as it translates into an estimated 22 to 22.9 million metric tons of CO2 emissions each year . This is nearly equivalent to the energy use of almost 2.6 billion homes a year. With more mining moving to the U.S. and other countries, this amount could grow even larger unless more renewable energy is used.

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