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The Environmental Impact of Cryptocurrency

March 27, 2022
Tyler Odenthal

The inheritance of the Earth, and the responsibility to take care of it, are things that every human being has in common. We all live on this planet. It is our charge to take care of it. It will also be the responsibility of our children and grandchildren. 

However, it seems that all eight billion of us living on this planet have varying interpretations of the term "responsibility."

For example, many of us have different interpretations of the environmental impact of human actions upon the Earth. We don't even agree on the severity or causes of climate change on the Earth.

Many climate change deniers wouldn't accept the worsening severity of climate change until formerly "once-in-a-lifetime" storms, and severe weather phenomena became commonplace.

It is undeniable that the actions of human beings are causing worsening climate change. Everything we do, from farming, driving fossil fuel cars, and even cryptocurrency mining, is causing worsening global warming.

Cryptocurrency production is increasing global carbon footprints, electricity waste, and the amount of toxic electronic waste, computers, and electronic hardware dumped into the environment.

The global damages caused by climate change, and the fact that human beings would be the source causing and accelerating climate change, was first predicted almost 200 years ago.

Discovery and Origin of the Climate Change Threat

French mathematician Jean-Baptiste Joseph Fourier calculated in 1824 that global temperatures should be much colder based on Earth's distance from the sun. Fourier theorized that the planet must have an "insulating blanket" comprised of unknown components mitigating temperatures.

American scientist and inventor Eunice Foote discovered that those unknown components were carbon dioxide and water vapor in 1856. Technically, Swedish scientist Svante Arrhenius conceptualized the idea that global warming would be caused by the greenhouse effect in 1896. English engineer and inventor 

Guy Callendar linked the connection of rising carbon dioxide levels with encroaching climate change and global warming in 1938.

The point is that humanity has known about the threat of climate change for 200 years. Society didn't know better then. However, we know better now. There is no excuse to accelerate the environmental impact of climate change knowingly.

A carbon footprint is the amount of greenhouse gases, like methane and carbon, released into the environment annually due to human actions. The global annual carbon footprint average for one human being is four tons. The typical American carbon footprint is 16 tons.

Without changes, global temperatures could increase by a few degrees in just 30 years. That doesn't sound like a lot. But the hottest temperatures in recorded human history occurred in the past seven years in a row. The heat waves of Earth's future will be far worse.

Modern agricultural and deforestation techniques generate over 32% of the global greenhouse emissions in one year. Grazing cattle creates significant levels of greenhouse gases. Until new, efficient, and sustainable forms of agriculture and deforestation are implemented, the problem will worsen.

Climate change prevention advocates used to say that humanity was destroying the Earth slowly, but human beings seem to be picking up the pace lately.

However, the cryptocurrency financial industry could be the worst perpetrator of carbon footprint generation and climate change acceleration.

The Dawning Truth of The Cryptocurrency Industry's Environmental Impact

Just one cryptocurrency, Bitcoin, generates over 37 megatons of carbon dioxide pollution annually. That is more than what New Zealand generates in a year.

Electronic waste is the discarding of computers, hardware, and electronic equipment used to mine cryptocurrencies. E-waste fills landfills and the environment with increasing tons of toxic electronic trash.

And cryptocurrency mining, the computational process by which many kinds of cryptocurrencies are generated, uses more energy than most countries.

The environmental impact of cryptocurrency carbon footprints and how they are contributing to the worsening of global climate change are still being assessed and calculated. After all, cryptocurrencies are a new phenomenon that changes the way people use money.

Cryptocurrencies were invented in 2008 and were initially given away for free. By December 2017, the financial market value of one Bitcoin was worth almost $20,000. And in late 2017, cryptocurrency mania took over the world.

Even though cryptocurrency valuation is notoriously volatile, one Bitcoin had a financial market trading value of over $40,000 as of this writing. Currently, there are over 18,000 cryptocurrencies and counting.

The cryptocurrency market was probably worth just a few hundred million in 2018. The average cryptocurrency had no value in January 2009 when the first crypto, Bitcoin, was launched. Currently, the cryptocurrency financial market is worth over $3 trillion and counting.

And the underlying technology of many cryptocurrencies, blockchain technology, may be adopted by governments to design the completely cashless currency system of the future.

Our point here is that the integration of cryptocurrencies in the fabric of the global financial infrastructure will only increase. Entire corporations and governments are dedicating federal-scale resources for cryptocurrency mining 24-hours a day, seven days a week.

Unless more efficient and carbon-neutral methods of mining cryptocurrencies are implemented, the environmental impact of cryptocurrency mining will be incalculably severe and irreversible in the future.

How bad are the current environmental impact concerns of cryptocurrency mining? And how bad is the carbon footprint and energy consumption problem when it comes to cryptocurrency mining?

Exactly how does cryptocurrency mining generate such high carbon footprint emissions? How does cryptocurrency mining generate carbons footprints that affect the world?

And can the cryptocurrency mining industry ever become a collectively eco-friendly and carbon-neutral process?

Let's briefly discuss cryptocurrencies and cryptocurrency mining to assess this issue better.

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Related: How to Make Money Mining Data for Cryptocurrency

What is a Cryptocurrency?

The cryptocurrency was conceptualized in 2008 in the aftermath of the global financial crisis. 

The concept of the cryptocurrency was created by an individual, or group of people, known as "Satoshi Nakamoto." 

No one knows if Satoshi Nakamoto was a real person to this day.

A white paper on the viability of a cryptography-protected digital asset called a cryptocurrency was published that same year anonymously.

A cryptocurrency is a digital asset created online via computational mathematics in a process called crypto mining. 

Not all cryptocurrencies are created via mining; however, the most famous ones that you know about, like Bitcoin or Ethereum, are usually created via mining.

Cryptocurrencies are created, transacted, and supported by the blockchain, a globally reaching software network that secures transactions, makes fraud difficult and determines the ownership of crypto coins. Individual cryptocurrency units are known as "tokens" or "coins."

Cryptocurrencies that are mined are created via advanced computational computer equipment called mining rigs. You can mine cryptocurrencies with a smart device. But most serious crypto traders, corporations, and governments that mine cryptocurrencies use advanced mining rigs.

Most cryptocurrencies have a finite supply of coins available. You use a mining rig to solve complex mathematic problems to earn cryptocurrencies. Once earned, the data is embedded in a "block" on the blockchain via cryptography.

Think of the traditional financial infrastructure of the world. Governments and central banks create fiat currencies. Fiat currencies are tangible and can be used in stores, banks, in the form of credit, and so on.

You can create cryptocurrencies on your own on a decentralized system. No government or central bank controls or regulates cryptocurrencies. Cryptocurrencies are not tangible and must be traded or converted into a traditional currency to be tangible. 

The infrastructure of the cryptocurrency industry is entirely digital.

Cryptocurrencies have revolutionized the global financial industry. Individuals, governments, and corporations can use cryptocurrencies to move money around the world securely and anonymously.

The "cashless society" concept may become a reality in the future when blockchain technology evolves in the far future. 

Most people have heard the term "cryptocurrency," even if they don't know what it is or how to explain it.

Cryptocurrency mania took over the world in 2018. Untold numbers of people and governments invested in cryptocurrency mining rigs. Mining rigs are costly and energy-intensive to use. But they are used to cash in on the cryptocurrency craze.

However, the ideal time to make such an investment would have been in 2009, when cryptocurrency was given away cheaply or free by its creators. Those people benefitted in December 2017 when individual Bitcoin trading values almost peaked at $20,000.

What is the point of all this data?

The point is that now it is not just individuals trying to cash in on cryptocurrencies. Billion-dollar corporations and governments are investing in mining rig operations to mine for cryptocurrencies 24-hours a day and seven days a week.

And more corporations and governments will progressively take up the practice.

And the cumulative effects of corporations and government-backed cryptocurrency mining operations in entire buildings and complexes in multiple regions means that global carbon footprints, energy waste, and electronic waste will increase and worsen in the future.

How Does Cryptocurrency Mining Generate Massive Carbon Footprints?

Every Bitcoin mining rig on the planet uses over 91 terawatts of electricity every year. And that amount will only increase each year.

Global Bitcoin mining, which individuals do, corporations, and governments collectively, uses more electricity than tech giant Google. Global Bitcoin mining uses more electricity than every person living in Finland every year. And 5.5 million people are living in Finland.

So, how does cryptocurrency mining generate massive carbon footprints that worsen climate change and global warming?

About 83% of the electricity generated in the United States is created via the use of fossil fuels, coal, natural gas, and to a lesser degree, nuclear power. Only about 17% of the electricity in the United States is created via renewable energy sources.

The burning of natural gas, coal, and fossil fuels releases carbon dioxide and other greenhouse gases into the environment.

So, the more cryptocurrency mining operations come into existence, the more the global carbon footprint will increase every year. And since most cryptocurrencies have individual token limits, more and more people, corporations, and governments will be using more electricity to mine dwindling coin supplies.

And since new cryptocurrencies are created all of the time, the cryptocurrency carbon footprint problem will always be cyclical and self-perpetuating.

And by the looks of the environmental impact of cryptocurrencies, it looks like the problem will only worsen.

Cryptocurrency's Carbon Footprint

As previously mentioned, global Bitcoin mining operations create a global footprint of over 37 megatons every year. Bitcoin mining generates more carbon dioxide emissions than some countries, like New Zealand.

Let's examine this problem in context. Gold mining requires the refinement of tons of ore with toxic chemicals that pollute the environment.

However, mining just the financial value of one Bitcoin, currently just about $40,000, generates a much larger carbon footprint than refining the equivalent amount of gold.

Mining one Bitcoin right now generates 191 tons of carbon dioxide. However, refining $40,000 worth of gold only generates 13 tons of carbon dioxide.

What must be considered is that we are only talking about the annual carbon footprints of Bitcoin only right now. There are over 18,000 different and distinct kinds of cryptocurrencies at the time of this writing. And more cryptocurrencies are being created all the time.

The carbon footprint generation of every cryptocurrency must be analyzed so an accurate assessment of the environmental impact of cryptocurrencies can be calculated.

Cryptocurrency Energy Consumption

The mining bitcoin mining on a global level requires the consumption of over 91 terawatts of energy. That is more energy than the entire population of Finland consumes in a year.

The problem here again is that we are only just examining the energy consumption of Bitcoin. We need to assess the electricity consumption of every minable cryptocurrency to appreciate how much energy is being used to mine them.

Let's examine this problem with contextual examples.

It takes 17 megajoules of electricity to mine $1 worth of Bitcoin. 

It only takes 5 megajoules of electricity to refine $1 of gold.

You would need to harness the energy in 1,300 lighting strikes to generate the electricity required to mine one Bitcoin. To burn off the equivalent amount of energy you need to mine one Bitcoin, you would need to drive 1.2 million miles in a car.

And remember, 83% of energy in the United States is created via the burning of coal, fossil fuels, and natural gas. The more electricity used to mine cryptocurrencies, the greater the carbon footprint.

Cryptocurrencies and the Electronic Waste Problem

Mining rigs and various kinds of cryptocurrency hardware tend to burn out. And this issue is created an electronic waste problem that is not getting as enough attention as the cryptocurrency carbon footprint problem.

About 54 megatons of electronic waste are generated every year. Electronic waste is computer monitors and CPUs, cables, speakers, lamps, cameras, printers, and other kinds of computer hardware thrown away into the environment.

Less than 18 megatons of electronic waste are ever recycled.

Electronic waste contains toxic chemicals like chlorofluorocarbons, hydrochlorofluorocarbons, lead, mercury, cadmium, thallium, and more.

The more cryptocurrencies are mined, the more electronic waste will pollute the planet.

Potential Solutions

American politicians are planning to hold hearings about the environmental impact of cryptocurrencies. However, humanity has known about the effects of climate change for 200 years. 

People in positions of power have wasted too much time meeting to talk about the problem instead of solving it.

Some environment advocates suggest planting trees to offset the environmental impact of cryptocurrencies. But over 404 million trees would have to be planted annually to offset the mining impact of just Bitcoin and Ethereum, never mind the other 18,000 cryptocurrencies.

Many entrepreneurs want to create carbon-neutral cryptocurrencies. And many cryptocurrencies don't require mining. But the most profitable and famous cryptocurrencies require mining. And it's easier to accept the status quo than change the system.

The only certain thing is that the solution to the environmental impact of cryptocurrencies must be found sooner than later.

Otherwise, our grandchildren or great-grandchildren may lose their inheritance of the Earth.

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Related:Understanding Blockchain and Data Science Today