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How's crypto affecting the planet?

Updated: Jul 24, 2021

Bitcoin does consume lots of energy to be mined, here's how it affects the environment

So there's a lot that's been made about bitcoin's energy consumption which isn't surprising considering the general advice is for home miners to not even try to mine it

as the energy cost needed to run GPUs means you'd probably never even make a profit but nonetheless large-scale mining continues and bitcoin transactions are processed every day which sucks down a lot of power much of which is coming from polluting sources like coal plants so is bitcoin actually going to be some kind of monetary messiah

or is it really just killing our planet at first glance the numbers are a little alarming if you just look at the energy consumption of the bitcoin network alone in late April 2021 it was around 134 terawatt-hours per year that's more than the entire country of Sweden or just under half of the united kingdom and consumption will probably keep rising this might not be that big of a deal if the energy were coming from clean sources but it's estimated that 61 of bitcoin's energy consumption is from non-renewable sources at this time which obviously pumps lots of carbon into the atmosphere.

The fact that a huge proportion of bitcoin mining is done in China which remains heavily dependent on coal. Earlier this year a failure of one coal plant in China cut out the processing power of the entire bitcoin network by over a third. All this carbon had one group of researchers projecting that bitcoin alone could affect the atmosphere enough to warm the planet by 2 degrees celsius before the year 2050 a huge amount when talking about global climate. So does that mean that we should be pumping the brakes on bitcoin mining? Well, hold on a second, the study we just mentioned had plenty of detractors who pointed out it made a ton of assumptions about the actual volume of mining that would take place over the next few decades and the assumptions about how that mining is done and the resources of it and everything that may have been wrong but outside of that there's also an argument to be made that bitcoin mining could actually accelerate the growth of the renewable energy sector the idea is that miners are seeking the cheapest forms of electricity available in order to maximize profits remember how we mentioned that most bitcoin mining utilizes non-renewables well there's actually a notable major exception during the rainy months in Sichuan, China mining activity spikes due to an abundance of cheap hydroelectric power growing to 50 percent of world bitcoin mining powered almost entirely by renewables in this vein.

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Sichuan, China

Energy companies might have an incentive to keep building out renewable infrastructure in rural areas where solar wind and hydropower are usually more abundant in response to demand from miners large-scale mining operations often move to rural areas for the low energy costs already making this one way that bitcoin could help accelerate the transition to cleaner energy. We should also think about the carbon footprint of the traditional banking and financial sectors manufacturing plastic credit cards, processing multiple-step interactions printing paper money that move all have an environmental impact not just in terms of actual materials and energy used but also the fact that simply having the U.S. dollar as the World's reserve currency has an environmental cost as part of the reason it has so much clout globally is that oil prices are given in U.S. dollars thanks to an agreement made with Saudi Arabia back in the 1970s many of the U.S. dollars Saudi Arabia received in exchange for oil were reinvested in American companies who provide equipment for extracting oil as well as stocks and other large American firms outside the oil industry and while today there are many other reasons the U.S. dollar is the world's reserve currency oil did help propel it to that status. The point is that the bones of the world economy are already heavily linked to fossil fuels even without crypto.

But this doesn't mean that we should just be ignoring the impact of energy-intensive mining it's still an issue serious enough that Elon Musk who is trying to convince the U.S. environmental protection agency to let tesla sell renewable energy credits to polluting power companies decided that tesla would no longer accept payments in bitcoin as environmental regulators are currently frowning upon crypto. So what's the answer to the question then? Well, bitcoin and other proof-of-work cryptos like ethereum 1.0 probably aren't destroying the planet but the issues they currently pose are something we'll have to reckon with but until then maybe we should start putting those little calculator styles solar panels on graphics cards.

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