The Carbon Footprint of Cryptocurrency
4 minute read
Popularity of cryptocurrency has grown exponentially over the past decade
Current cryptocurrency algorithms require massive amounts of energy and produce large amounts of carbon dioxide
Promising solutions include new algorithms and carbon-offsets in the form of planting trees with Ecodrive
If you have access to the internet, you’ve almost certainly heard the word “cryptocurrency.” Bitcoin is the most well-known form of this digital currency. Cryptocurrency is bought with traditional currency and stored in a database called a blockchain. One of the reasons cryptocurrency is so popular is that blockchains keep track of transactions in a decentralized manner, so no one person or group has control over the ledger. About 106 million people worldwide own some form of cryptocurrency.
There are more than 10,000 cryptocurrencies currently available to be publicly traded. The rise in popularity of cryptocurrencies has raised a lot of important questions: What is the financial risk to the average investor? How common is theft and fraud? What is the environmental impact?
Bitcoin is currently the most popular form of cryptocurrency, with $735.3 billion in market capitalization -- the price of each share of stock multiplied by the outstanding shares. In order to add more Bitcoins into circulation, advanced computer systems solve extremely complex mathematical problems in a process called Bitcoin mining. These computers consume massive amounts of energy in order to operate. Many environmentalists are concerned about the carbon emissions and electronic waste (e-waste) associated with this energy consumption.
Energy Use and Footprint
A single Bitcoin transaction uses 1,532.56 kWh of energy, which is enough power to run an average U.S. household for about 52 days. This energy consumption produces 727.96 kg of CO2 (or 1604.88 pounds), which is equivalent to 1,613,421 VISA transactions or 121,327 hours of watching Youtube. One transaction also produces 184 grams of e-waste which is equivalent to the weight of almost 2 C-size batteries.
On an annual basis, Bitcoin has a carbon footprint equivalent to the entire country of Libya and consumes the same amount of energy as Pakistan. It also produces about the same amount of e-waste as Luxembourg.
The second-most popular form of cryptocurrency is Ethereum, with $324.2 billion in market capitalization. While Ethereum mining uses a quarter to a half of the energy Bitcoin does, in 2018 Ethereum used about the same amount of electricity as Iceland. Currently, both Bitcoin and Ethereum operate on proof of work algorithms that require mining, which are responsible for the incredibly high energy consumption. A promising alternative, proof of stake, is used in some cryptocurrencies, and dramatically reduces the demand for energy.
How to Lessen Your Crypto Footprint
In encouraging news, the inventor of Ethereum has announced a plan to switch to a proof of stake algorithm that would reduce energy consumption by 99 percent. This change would also lessen the strain on computer systems, allowing them to be used for longer, and reducing e-waste output.
If you’re thinking about investing in cryptocurrency, please consider the environmental impact of your transaction. Try to invest in cryptocurrencies that use the proof of stake method, of which you can find a list on this website.
If you currently own a form of cryptocurrency that uses a proof of work algorithm, such as Bitcoin, you can offset the carbon emissions of your transactions by planting mangrove trees with Ecodrive. Each tree will capture 680 pounds of carbon in its lifetime. To offset the 1,600 pounds of CO2 produced by one Bitcoin transaction, you could plant 3 mangrove trees with Ecodrive for only three dollars!
Because cryptocurrency has no physical form, it may be easy to overlook its environmental impact. However, if cryptocurrency is truly the future of currency as some experts predict, we must recognize the environmental harm it’s causing in the present and insist on proactive solutions for the future of our planet.
