Since Bitcoin was first introduced to the public in 2009, technology and innovation have fueled the rise of various cryptocurrencies - digital, peer-to-peer forms of payment used to purchase goods and services online. Cryptocurrencies exist solely through digital platforms based on a technology referred to as a “blockchain.” Simply put, blockchains are decentralized, peer-to-peer databases that keep a digital record of transactions that are consistently updated in real-time. All cryptocurrency is stored online in digital wallets or on offline hardware devices such as USB drives and SD cards. While cryptocurrencies are wildly popular among investors, they are also highly volatile and differ drastically from traditional financial markets.
The process by which new cryptocurrencies are entered into circulation is called “Crypto Mining.” Crypto mining is a process that is tedious, laborious, and only intermittently rewarding. Miners use highly sophisticated computers and complex algorithms to collect transactions and organize them into “blocks,” which are then added to the chain of transactions - hence the term “blockchain.” Crypto miners are rewarded with the cryptocurrency being mined rather than a traditional commodity-backed currency, making the rewards both variable and competitive. “Bitcoin” is the world’s leading blockchain currency, and it is the most commonly mined of all the crypto’s. According to the World Bank, large companies and individuals generate nearly $20 million per day in Bitcoin mining alone.
IS CRYPTO MINING A
THREAT TO THE ENVIRONMENT?
The most significant cause for concern in crypto mining is the environmental impact imposed by the mining technology. As stated in a 2018 report published by the World Bank, the Bitcoin mining system consumes approximately 53TWh of electricity every year - nearly as much as the entire country of Bangladesh. Energy demand for crypto mining continues to increase, and the growing popularity of cryptocurrencies shows no signs of letting up.
Several major players in the world of blockchain currencies have taken notice, with the latest acknowledgments creating a significant drop in the value of the most popular cryptocurrencies. Elon Musk, co-founder and CEO of Tesla, recently announced that the company will no longer accept payment by Bitcoin due to its negative environmental impact. In the following days, Bitcoin saw nearly a 17% decrease in value - showing just how volatile these currencies can be.
MAJOR BITCOIN MINING
AROUND THE WORLD
While cryptocurrencies show the potential for growth and profit in the future of finance, volatility will remain high until the environmental impacts can be mitigated. There is hope, though, and several methods of crypto farming have shown the ability to mine the currencies using nearly 100% clean energy. Renewable resources are geographically determined, so power will need to come from various sources, including:
Hydropower (China, Brazil, Venezuela) Wind Energy - Both Onshore and Offshore (USA, Taiwan, India) Solar Energy (Morocco, Mexico, Egypt) Geothermal Energy (USA, Philippines, Iceland)
In fact, many argue that a demand for clean energy through crypto markets will actually speed up the global transition to renewable energy. The profitability of the crypto markets can support the growth of green technology and bring investment to environmental sectors that need funding. Further, implementing a carbon tax on those running crypto farms would reduce the immediate carbon footprint of these operations and give incentives to large mining networks to rely on renewables.