How the rise of crypto is harming the environment

Combine the yearly energy consumption of Google, Apple, Facebook, and Microsoft-“mining” Bitcoin consumes more. 

Calculate the electricity expended yearly by the entire state of Washington-“mining” Bitcoin expends more. 

Total the power used by an average American household over 72 days- “mining” one Bitcoin uses more.

Cryptocurrency-a virtual currency principled on operating without a chief monetary authority (ex. the government)-has captivated individuals over the past several years. Enthralled at the possibility of striking it rich, many have gambled on the aspiration of becoming a crypto success story. As a result, the price of one Bitcoin-the first and most popular cryptocurrency-skyrocketed $65,000 from April 2011 to April 2021. 

Critics doubt the wholly digital nature of crypto. However, “normal” currency-the tangible money in an economy- has already become less prevalent. 

Eamonn Manion, an economics and history teacher at Minnehaha Academy, explains this concept.

“Very few people are dealing cash the way we used to,” noted Manion. “Most people just use their credit card. So the way we treat money is already digital.”

Ultimately, the world is experiencing a technological overhaul and currency is simply following suit-but not without unexpected consequences. Despite their increasing fame in the world of money, Bitcoin and other cryptocurrencies such as Ethereum, Dogecoin, and Cardano have injurious environmental implications.

What is responsible for the rise of crypto?

In 2021, the crypto sector’s total market cap rose 187.5% and the price of the cryptocurrency Solana increased by 11,000%. 

There’s no doubt that the rise of crypto is happening.

Manion-who owns the cryptocurrencies Bitcoin, Ethereum, Cardano, DigiByte, Tezos, and Litecoin- speculates that this is due to a growing distrust in physical currency. 

“I think there’s a general sentiment amongst a lot of people that are upset currency is manipulated by a small percentage of people in the world-none of whom are voted into office-that have great amounts of power over your cash,” described Manion. “Whereas cryptocurrency is pretty much self-regulated.”

Additionally, to safeguard its currency, Bitcoin capped the total maximum amount of coins able to be mined at 21 million. For Manion, this guaranteed scarcity provides important security.

“I chose to get Bitcoin in large part because there’s only ever going to be 21 million Bitcoin. Period,” revealed Manion. “So if there’s only ever 21 million Bitcoin, but there are 8 billion people in the world, if you do the math, everyone would have [a small fraction] of a real full.”

For some, investing in crypto is founded in the anticipation to own the currency before it potentially becomes mainstream. For others, crypto is an investment similar to buying stock. They envision that, with time, its value will increase and produce a profit.

Nonetheless, each crypto investor-like Manion-is betting on the future.

“I think it will be a thing that is a rare commodity to have,” forecasted Manion. “How far in the future is that? Probably decently far. But, I think that is where things are going.”

How is cryptocurrency “mined”?

The U.S. Federal Reserve regulates the physical printing of the American dollar. However, in the absence of physical money and centralized authority, cryptocurrency requires an alternate form of regulation. With this dilemma in mind, the pseudonymous creator of Bitcoin, Satoshi Nakamoto, concocted a computerized ledger controlled by documented transactions and complex mathematics.

To “mine” or release new Bitcoins, supercomputers must perform arbitrary, convoluted calculations that validate or record new transactions. Miners compete to have their validation accepted by essentially solving a puzzle. This “puzzle” involves identifying a number called the nonce (short for number used once) that meets an elaborate set of numerical requirements. The miner who finishes this task first is granted a newly minted Bitcoin as well as any transaction fees owed by the sender. This process-popular among many cryptocurrencies-is called proof of work.

Because Bitcoin transactions are recorded in connected blocks that are part of a larger blockchain (a distributed database), altering one block alters all subsequent blocks. The result is a tamper-proof Bitcoin network. 

Further, the greater the value of Bitcoin, the greater the competition is between miners. To ensure that only one Bitcoin block is mined around every 10 minutes, the company modifies the complexity of the validation process every two weeks. 

Why is crypto mining bad for the environment?

The computational power needed to maintain cryptocurrencies’ secure networks often comes from carbon-based energy. Together, America and Kazakhstan-both countries that rely heavily on fossil fuels-account for 53% of Bitcoin mining. As a result, Bitcoin produces 96 million tons of carbon dioxide each year-a number that will only grow as miners race to gain a technological competitive edge. 

To make crypto as lucrative as possible, miners search for the cheapest electricity-often natural gas. Greenidge Generation, a company that mines Bitcoin, transformed a former coal-powered plant in Dresden, New York into a natural gas-powered Bitcoin “mine”. Now one of the largest crypto miners in the United States, its greenhouse gas emissions grew ten-fold from 2019 to 2022. 

In addition to their massive carbon footprint, crypto mining plants often require large amounts of water. To cool their plant, Greenidge pumps in 139 million gallons of freshwater daily through their intake pipes in nearby Seneca Lake. This process kills larvae, fish, and other organisms. Greenidge then further endangers Seneca Lake by emitting the used water back into its ecosystem 30° to 50° F hotter than normal.

Hydropower, Bitcoin’s most commonly used renewable energy, has similar inimical effects 

Overall, the energy expended by the crypto industry is only expected to grow as the currency becomes more widespread. Consequently, scientists anticipate that Bitcoin alone will increase global warming to over 2°C by 2050. 

What are crypto’s viable mining alternatives?

As statistics involving cryptocurrency and climate change become increasingly formidable, many environmentalists are stepping in. Earth Justice and the Sierra Club-both environmental advocacy groups-urged the New York State Department of Environmental Conservation to terminate the permit that allows Greenidge to increase its greenhouse gas emissions. They also cautioned that upstate New York has around 30 power plants that could be reworked to mine Bitcoin-a reality that could thwart the state’s plan to cease almost all greenhouse gas emissions by 2050.

The Crypto Climate Accord is another initiative hoping to stave off crypto’s environmental repercussions. This group-supported by 40 projects-aims to power blockchains with solely renewable energy by 2025. Further, the group hopes that by using more streamlined validation methods in areas with a surplus of renewable energy, all cryptocurrencies will produce net-zero carbon emissions by 2040.

In response to pressures from environmentalists, Ethereum (the second largest cryptocurrency) is turning to the alternative proof of stake method. The company expects that this shift will slash its energy consumption by 99.95%. The proof of stake method does not use computerized calculations to solve puzzles, rather, it functions as a lottery. Prospective validators wager their Ethereum coins; the more coins they wager, the higher their odds are to be randomly named the validator by the system. 

What is the future of crypto and the environment?

Despite environmentalists’ valiant efforts, Bitcoin has put millions of dollars into its complex hardware. Thus, a complete overhaul of the mining process would be costly and is somewhat implausible. R.A. Farrokhnia-professor and executive director at the Columbia Business School- acknowledges this and doubts the likelihood of Bitcoin ever becoming completely green. 

“These [environmentally friendly] ideas [require] very high upfront capital expenditures,” he noted to the Climate School of Colombia. “And we know that interest in mining is predicated on the price of Bitcoin itself, so you could have all sorts of truly expensive solutions that would aim to be more energy-efficient, but as soon as the price of Bitcoin were to drop below a certain threshold, all these projects would be [canceled] because they’re just not financially feasible.”

Ultimately, the future of crypto’s continuing contribution to climate change is almost as volatile as the price of Bitcoin itself.

Nevertheless, Farrokhnia is optimistic.

“There’s a new generation of crypto coming on board,” observed Farrokhnia. “They’re certainly more environmentally conscious, and hopefully, they understand the impact of the work beyond whatever they’re building.”

Like all industries, cryptocurrency ultimately revolves around money. However, to become the environmentally-conscious future generation that Farrokhnia describes, crypto investors must shift their priorities.

How do I advocate for the environment?

Johanna Beck-Minnehaha Academy Latin teacher and Earth Club adviser- encourages individuals to think beyond finances.

“As consumers, there’s a responsibility to put the environmental impacts first and foremost,” explained Beck. “The environment is not the number one thing for businesses. It’s not even number two or three. So as consumers we have to shop our conscience. We have a moral and ethical responsibility to take care of this planet.”

Overall, to better the future of the environment, Beck urges people to utilize the power they hold as consumers and educate others about industries that harm the planet-such as cryptocurrency.

“There’s power in being the consuming group,” reassured Beck. “If you demand of the companies producing cryptocurrency that it be done sustainably, there will be no choice but to do that. Also, talk to your friends [about harmful industries]. Talk to your circle. Then, they’ll talk to their circle. Let’s start a revolution where we pay less attention to things and more attention to the beautiful planet that we live on that we’re wrecking.”