Are Cryptocurrencies Bad For The Environment

With increased hype about cryptocurrency comes a growing concern about its bad effects on the environment. Critics point to the immense energy consumption, particularly linked to the mining process.

This guide aims to demystify the cryptocurrency-environment relationship. We will detail some of the more common misunderstandings and, of course, show you the real facts.

Bitcoin Mining’s Environmental Impact

Cryptocurrencies have a notable environmental impact, especially those using the Proof Of Work consensus mechanism like Bitcoin. However, what causes it? The main reason for crypto being bad for the environment is mining.

Bitcoin mining involves the generation of additional coins. It requires solving intricate mathematical problems to confirm and add new transactions to the blockchain. The first user to crack the puzzle gets BTC tokens. This procedure is extremely competitive, leading miners to put money into advanced equipment that uses up substantial energy.

Mining Bitcoin is bad for the environment due to its high energy consumption, resulting in large greenhouse gas emissions that contribute to climate change. Bitcoin uses around 91 TWh annually, which is higher than the total yearly indicators of Finland.

The annual Bitcoin carbon footprint is approximately 65 Mt CO2, which equals 0.2% of global carbon emissions. Although the estimates may vary each year, they are clearly on par with the carbon footprints of a small country.

However, Bitcoin is trying to become more environmentally friendly. For now, around 54.5% of Bitcoin mining energy comes from renewable sources. If you’re curious about ethical investments, you’re probably familiar with ESG. It is essentially a measurement of a company by its environment, social, and governance impacts. Bitcoin can be viewed as ESG-aligned even though it’s often criticized for its energy consumption. It encourages the use of renewable energy, helps to stabilize power grids, and supports financial inclusion.

How Bad Is Mining For The Environment?

Crypto mining has a substantial environmental impact due to its intensive energy consumption. But it’s not the only negative consequence. When the mining equipment becomes outdated, it produces a significant amount of electronic waste. And when lots of mining happens in one area, it can use up too much power, causing blackouts and higher electricity bills for people who live there. Mining machines also need lots of water to cool down, which can be a problem if water is scarce.

Each mining operation generally uses from 300W to 1kW of power every hour on average. It accounts for a perceptible share of worldwide e-usage and accounts for 0.6% to 2.3% of yearly US electricity use.

Are There Green Cryptocurrencies?

But are there any environmentally friendly tokens available? Definitely, certain cryptocurrencies focus on sustainability, employ energy-efficient consensus mechanisms, and give preference to renewable energy sources. These coins could lead the crypto sector towards a more environmentally friendly future.

Some examples of green cryptocurrencies include:

• Cardano (ADA)
• Nano (XNO)
• Algorand (ALGO)
• Chia (XCH)
• BitGreen (BITG)

Myths About Crypto’s Environmental Impact

There is much discussion surrounding how crypto impacts the environment, leading to many misunderstandings. A few of the myths about crypto's environmental effects are:

• All Cryptocurrencies are Equally Harmful to the Environment: While Bitcoin uses a lot of energy, many other cryptocurrencies use much less.
• The Crypto Industry Accounts for a Noticeable Part of Global Energy Consumption: While the energy footprint of cryptocurrencies is growing, it's still a small part of the world's total use.
• Mining Always Contributes to Carbon Emissions: Mining operations can also leverage renewable energy sources, potentially reducing their environmental impact.
• Mining is Inherently Wasteful: While some mining practices might be inefficient, there is an increasing shift towards utilizing more sustainable mining practices.

Now you understand the impact of crypto on our planet. However, understanding the positive and negative aspects of crypto operations is essential to asses its environmental effects.

Hopefully, this guide has set the record straight. Please leave your thoughts and questions below!