How Cryptocurrency Influences The Environment?

How Cryptocurrency Influences The Environment?

Having evolved during the last ten years, cryptocurrencies still stay an obscure issue for many people. Until recently, this form of digital money was associated with terrorism, criminals, and under-the-counter trade. Today, the notion of cryptocurrencies becomes more or less clear – the industry has made big steps towards making digital currencies legitimate.

The veterans of the crypto market, such as Bitcoin and Ethereum, have reached large daily transaction volumes, and there are hundreds of other cryptocurrencies making their way to the top. Cryptocurrencies transform the global market. But while you are googling buy QTUM price or search where to buy Enjin coin, it’s not the digital world only that’s changing – crypto has a huge environmental impact, too.

Nodes & Mining

The vast majority of cryptocurrencies are designed after the model of Bitcoin since it was successfully adopted. Being a fully decentralized token, it is not controlled by any central bank or government. It is not printed or released like a regular currency – instead, it is generated through the so-called ‘mining’ process. It means that computers solve complicated mathematical problems giving BTC as a reward for it.

The system of computers, or nodes, is supported by the blockchain. This technology works as a distributed digital ledger that tracks and records all transactions. The information about these operations is shared over the nodes of the network (computers).

So, why has this technology become so popular? The concept of cryptocurrency is praised for numerous advantages:

● It allows for anonymous transactions;
● Operations are instant, especially with some advanced cryptocurrencies;
● No geographical borders apply;
● Transaction commissions are much lower.

Yet, the process of mining and transaction processing requires an enormous amount of energy, and Bitcoin is one of the largest consumers on the market. For example, according to the data by the Bitcoin Energy Consumption Index, published by Digiconomist, in December 2017, Bitcoin used about 32 terawatts of energy each year – it’s equal to the power used by 50,000 US homes. This is even more than Visa Inc. utilizes.

In 2019, BBC.com estimated that Bitcoin is using about 7 gigawatts of electricity, which is 0.21% of the global supply. Over one year, this level has equated with the power consumption of entire Switzerland.

Thus, numerous advantages of the cryptocurrency market come for the price of energy. Cryptocurrency mining is a costly pleasure, not many people can cover the energy bills after installing mining rigs. The process is particularly expensive in the USA and Europe.

All that raises a major concern about the growing energy consumption in the cryptocurrency sphere – it’s not Bitcoin alone that requires electricity. As cryptocurrencies become more popular, they require more energy. Besides, the complexity of mathematical tasks for Bitcoin mining increases: miners have to spend more electricity in return of BTC, the value of which steadily goes up.

Digital Currencies and Fossil Fuels: What’s The Connection?

It may not seem evident, but there is also an indirect connection between cryptocurrencies and fossil fuels. Has it anything to do with mining? Partially. Some experts claim that ‘Bitcoin is decelerating the process of rapid transition from fossil fuels’.

It can be explained by the fact that the majority of mining operations take place in China: miners organize huge rigs in rural areas where electricity is not expensive. Yet, according to the research team from the University of Cambridge, the electricity used in these mining operations is produced by inefficient coal-based power plans that were organized in rural areas in advance. However, some of these projects have not been completed.

Just to compare: according to this report, the energy required by one mining project in Mongolia is the same as it takes for a Boeing 747 to fly.

So far, the burning of coal is the main source of electricity for both mining and hosting in some areas. Yet, coal-burning takes a seriously negative toll on the environment because of the carbon dioxide emitted. Thus, Bitcoin and other cryptocurrencies put the progress in danger not letting us move to low-carbon energy technologies.

Miners Disagree

A lot of miners, including the ones handling Bitcoin, give arguments against these facts and claim that mining is not as dangerous as considered. Some Cambridge researchers discovered that the environmental impact might be much lower than that connected with the physical extraction process of natural resources.

Also, some miners propose introducing technologies and tools aimed at reducing the amount of required energy. For instance, HydroMiner project, a Vienna-based company, leverages renewable hydroelectric power for mining. Its co-founder, Nadine Damblon, believes that modern technologies allow for what seemed to be impossible a few decades ago.

She rests assured that cryptocurrencies will become even more energy-efficient as they continue developing and evolving. HydroMiner team is working tight-lipped over introducing the new sources of renewable energy.

Are Cryptocurrencies Dangerous For The World?

So, who is right in these debates? The answer to the question isn’t a straightforward one. While it’s clear that mining and hosting require enormous resources due to the growing demand for crypto, some analysts don’t agree with the figures. A lot of crypto enthusiasts claim that the benefits we reap from digital currencies overweigh the environmental toll.

Here comes the most complicated issue. How to measure the impact on Earth? It is very difficult since Bitcoin and cryptocurrencies are anonymous, so tracking every operation isn’t possible. Giving a precise estimation of worldwide crypto use is quite problematic. Dutch bitcoin analyst Alex de Vries says the numbers provided are false, and even the most energy-efficient mining rigs might use as much as 13 terawatt-hours of electricity in total, which is as much as Slovenia uses.

But if not all mining machines are as efficient as those, this amount of energy could be even higher. And it keeps growing as the number of miners joining is increasing day by day. De Vries provides a pessimistic forecast saying that “we are consuming thousands of times more energy than we could”.

Energy technologies are evolving, and while you are checking the Gemini price chart or building your mining rig, there might be new methods tested and improved. Cryptocurrencies might become way less energy-demanding over time, but their benefits will still make it a worthy industry.