In the past decade, technological advantages have opened the door for new avenues for individuals to make a living, but often these opportunities are created at the expense of the environment, and no trend, activity fits this description more than cryptocurrency mining. Cryptocurrency has become the go-to for many tech-savvy individuals to invest their effort and money with their value reaching staggering numbers. While Bitcoin and other coins’ growth has been undeniable, so is their hidden risks and threat towards the environment. Cryptocurrency mining, with its extreme usage of electricity and emission, poses a major risk for the environment and exacerbates current climate issues that has affected many around the world, and unless the change from cryptocurrencies’ current “proof-of-work” system to the more sustainable “proof-of-stake” method is made, the problems spurred on by this activity will continue to fester.
To understand the issues that cryptocurrency mining poses, one must understand the core definitions of this activity as well as cryptocurrency itself. Cryptocurrencies, shortened to crypto, is a form of online currency that does not require a bank to verify the legitimacy of transactions, but rather a computer network comprising of all the users of that crypto network. Some of the most popular crypto coins includes Ethereum, Monero, and most notably the progenitor, Bitcoin, with one single Bitcoin reaching $68,000 in November 2021 (Edwards). Because of this potential to make massive amounts of money, cryptocurrency mining – the process of obtaining and verifying new crypto coins and its related transactions with the help of power-consuming equipment such as graphic cards and CPUs, has become a booming industry in the past decade. To simplify crypto mining, it is similar to a lottery, in which the first person to successfully claim and declare themselves the owner of the winning ticket gets the grand prize. In crypto mining, thousands of individuals, as well as corporations, attempt to become the first to successfully record and legitimize a crypto transaction on a public ledger (known as the “blockchain”), and claim for themselves an amount of new crypto tokens as compensation, with the computational help of their power-hungry machines. (Huang et al.). The more power one uses, the more likely it is they become successful in mining these tokens. This current system of getting and verifying every single crypto transaction on the blockchain and its complex codes as soon as possible is known as “proof-of-work,” since users are essentially showing their proof of having used technology to be the first to verify their newly claimed crypto, and as more and more token are verified and added to the blockchain and users join the network, the amount of machinery and power needed and expended in this mining activity gets higher. While this helps prevent malicious and fraudulent activities from happening and for crypto to retain value, it is this very system that is the reason why crypto mining is harming the environment. Because of the massive number of machines and equipment needed to compute and successfully outcompete users and companies alike in verifying and obtaining new coins, and the fact that the machines have to always stay active to do computations to keep the verification records intact, extremely large amounts of energy is used up, raising concerns about the amount of electricity wasted and the emissions that these mining projects leave behind. Various research has been made on this topic, such as one by Schnikus et al. in the International Journal of Energy Economics and Policy, have concluded that Bitcoin and other mining projects is using up enormous amounts of electricity, raising concerns about the industry’s sustainability in the future. (Schinckus et al., “Crypto-currencies Trading and Energy Consumption” 361).
One of the largest and most notable effects of cryptocurrency mining on the environment is its massive electricity consumption, which rivals the amount used by entire countries. When Bitcoin was first introduced, all that was needed to start the mining process was a single computer in one’s room, but as more and more people join crypto networks and as more coins are verified on the blockchain, more effort and power is needed to mine more coins, which leads us today where to profitably mine crypto, entire rooms full of data banks, graphics cards and their maintenance equipment such as cooling are needed. Furthermore, with there being thousands of people, as well as million-dollar corporations running their mining rigs every day, the amount of electricity consumed is overwhelming. According to Digiconomist, the estimated level of annual electrical energy consumed by the Bitcoin as of June 14, 2022, is 151.84 Terawatts per hour (TWh) per year, or 151.84 trillion watts per hour on an annual basis. To put this number in context, the country of Sweden is estimated to consume 135.6 TWh annually, which means that the Bitcoin network is potentially consuming more electricity than some countries in the world (“Bitcoin Energy Consumption Index”). This heavy electricity consumption that cryptocurrency mining projects poses problems towards the environment for two main reasons. Firstly, this amount of electricity that is being used to compute codes and verify coins could instead be used to for other benefits, as environmentalists G. Tyler Miller and Spoolman stated in their work Living in the Environment:
Reducing energy waste is the quickest, cleanest, and usually the cheapest, way to provide more energy, reduce pollution and environmental degradation, slow global warming, and increase economic and national security.” (Miller, Spoolman 401).
To expense electricity at this large of a scale is not only taxing on the sources that generate them, but also wasteful since this same electricity could be used to power entire nations and contribute to environmental protection efforts and projects that could bring benefits to people now and in the future. Secondly, and more critically, to generate this much electricity for their projects, crypto miners and companies are relying on power plants that are using fossil fuels, which release dangerous amounts of emission into the environment.
The amount of greenhouse gases that is released by power plants using fossil fuels is another critical concern for crypto mining towards the environment. To power massive mining projects and sustain all the equipment involved, crypto has to rely on big power plants and factories, with many of them having to run fossil fuel, coal, and other non-renewable energy sources which releases enormous amounts of gases that contribute to air pollution and climate change (Rhodes). A research article posted on the science journal Earth by Amirreza Talaiekhozani et al. goes in-depth into the specific amounts of pollutants released by crypto mining projects, specifically in Iran. The researchers have found that dangerous gases such as carbon monoxide (CO), sulfur and nitrogen oxides (SOx and NOx), volatile organic compounds (VoC) and other particulate matter (PM) were indeed being released into the environment. In particular, they found that on average an equivalent of 3530 tons of NOx is released on an annual basis, for CO emissions, that number is 1547 tons. Furthermore, the number of SOx, VoC and PM released by both legal and illegal crypto mining activities averaged annually 11, 103 and 35 tons, respectively. (Talaiekhozani et al. 670, 671). All of these gases pose dangerous health risks to humans, in particular exposure to high level of carbon monoxide, a colorless and odorless gas, leads to nausea, impairment, and death, while nitric oxides lead to eyes, nose and throat irritation and impairs the respiratory system. (Miller, Spoolman 472, 473). Even though the research and its results are only limited to Iran, it does help visualize what types of emissions operations may have on a bigger scale and in larger energy-producing countries.
Some solutions have been proposed such as moving mining operations to more sustainable countries (Náñez Alonso et al. 4254), but the most promising one to solve the problems that cryptocurrency mining has on the environment is the change of coding system from the present proof-of-work method into a new method called “proof-of-stake.” Previously, to successfully verify new cryptocurrency transactions, the proof that miners had to show was how much energy and work they had expended in getting their share of cryptocurrency in the network. In the proof-of-stake method, some specific users will be chosen by the system to take up the job of verification by staking out a part of their crypto portfolio as collateral (Frankenfield). For example, in Ethereum’s case, 32 Ethereum tokens (32 ETH) is required as a deposit for any new users to become validators, who will then be able to verify new crypto blocks and vote on their legitimacy and earn compensation for their work. (Ethereum). Because of how the “proof-of-stake” system is structured to require less machinery and power, it holds the most potential to solve the environmental issues spurred on by traditional “proof-of-work” crypto mining.
If implemented correctly, the new “proof-of-stake” method has the potential to cut a significant part of the current energy consumption for cryptocurrency and provide a compromise for both advocates and critics of crypto mining. Since a large part of the energy consumed in crypto mining is spent on computers trying to validate crypto and keeping check of the work made by previous miners on the blockchain, switching to a system where this work is done by users would naturally slash the electricity used, therefore also reducing the emission released. Furthermore, because there is no longer an incentive for users to invest in overpowered machines or operations to mine cryptocurrency, it can be expected that the energy consumption and the emission that comes from crypto mining will go down as well. A blog written on the forums of the Ethereum token estimated that its network will consume 99.95% less electricity when it makes the switch to “proof-of-stake” (Ethereum Foundation). Despite this finding only being an estimate, it still shows the potential that this system can bring to cryptocurrency. In addition, unlike more drastic methods which may involve banning away crypto altogether, switching to “proof-of-stake” benefits both supporters and oppositions to cryptocurrency mining, and it has gained support by official environmental movements and organizations, such as Greenpeace USA (Kruse). Because of its potential and support by both users and non-users of crypto, this “proof-of-stake” system may provide the key to solving the environmental issues spurred on by crypto mining.
To implement this “proof-of-stake” method, there is, of course, possible downsides, with one of the biggest flaws pointed out by detractors being that they are difficult to implement, and implementation towards all types of cryptocurrencies will be unfeasible due to the hundreds of types of crypto in the world. It will undeniably be tough, or even impossible to have this system be adopted in every single cryptocurrency, but rather than have this “proof-of-stake” in every token, the goal here is to have it applied for the major cryptos such as Bitcoin, which has massive contributions to crypto mining’s environmental issues. Furthermore, while this system is hard to implement, it is not impossible, as demonstrated by it being created and soon to be applied with Ethereum (Ethereum), the second most valuable crypto behind Bitcoin (CoinMarketCap). In addition, the fact that “proof-of-stake” can be implemented in an established and influential crypto token like Ethereum further insinuates the fact that this accomplishment can be done in cryptos of smaller scale and maturity in the market. Even if going for this “proof-of-stake” system creates difficulties, this process still needs to be seen through due to its high potential and promise to solve the energy-consumption and emission problems that crypto mining has had on the environment and may continue to have in the future.
Cryptocurrency mining, as of now, is extremely energy-consuming, and the pollution that occurs in this process is harmful, however, certain methods and changes in the codes of cryptocurrencies can be implemented in order to reduce the severity of these issues. In the future, humans can expect more possible threats to the environment just like crypto mining to rise up, in these scenarios, it is important to reconsider the fundamentals behind these events because in which one may find the answer to solving the issues caused by them.
Works Cited
“Bitcoin Energy Consumption Index.” Digiconomist, 21 Apr. 2022, https://digiconomist.net/bitcoin-energy-consumption
CoinMarketCap. “Cryptocurrency Prices, Charts And Market Capitalizations.” CoinMarketCap, https://coinmarketcap.com. Accessed 24 June 2022.
Edwards, John. “Bitcoin’s Price History.” Investopedia, 13 June 2022, www.investopedia.com/articles/forex/121815/bitcoins-price-history.asp
Ethereum. “Proof-of-Stake (PoS).” Ethereum.Org, https://ethereum.org/en/developers/docs/consensus-mechanisms/pos . Accessed 17 June 2022.
Ethereum Foundation. “Ethereum’s Energy Usage Will Soon Decrease by ~99.95%.” Ethereum Foundation Blog, 18 May 2021, https://blog.ethereum.org/2021/05/18/country-power-no-more
Frankenfield, Jake. “Proof-of-Stake (PoS).” Investopedia, 10 June 2022, www.investopedia.com/terms/p/proof-stake-pos.asp
Huang, Jon, et al. “Bitcoin Uses More Electricity Than Many Countries. How Is That Possible?” The New York Times, 22 Apr. 2022, www.nytimes.com/interactive/2021/09/03/climate/bitcoin-carbon-footprint-electricity.html.
Kruse, Tyler. “Change The Code: Not The Climate – , EWG, Others Launch Campaign to Push Bitcoin to Reduce Climate Pollution.” Greenpeace USA, 29 Mar. 2022, www.greenpeace.org/usa/news/change-the-code-not-the-climate-greenpeace-usa-ewg-others-launch-campaign-to-push-bitcoin-to-reduce-climate-pollution
Miller, G. Tyler, Jr, and Scott Spoolman. Living in the Environment: Concepts, Connections, and Solutions, 16th Edition. 16th ed., e-book, Brooks Cole, 2008.
Náñez Alonso, Sergio Luis, et al. “Cryptocurrency Mining from an Economic and Environmental Perspective. Analysis of the Most and Least Sustainable Countries.” Energies, vol. 14, no. 14, 2021, p. 4254. Crossref, https://doi.org/10.3390/en14144254
Rhodes, Joshua. “Is Bitcoin Inherently Bad For The Environment?” Forbes, 8 Oct. 2021, www.forbes.com/sites/joshuarhodes/2021/10/08/is-bitcoin-inherently-bad-for-the-environment/?sh=4ffa55283033
Schinckus, C., C. P. Nguyen, and F. C. H. Ling. “Crypto-Currencies Trading and Energy Consumption”. International Journal of Energy Economics and Policy, vol. 10, no. 3, Mar. 2020, pp. 355-64, https://www.econjournals.com/index.php/ijeep/article/view/9258
Talaiekhozani, Amirreza, et al. “Estimation of Carbon Monoxide, Sulfur Oxides, Nitrogen Oxides, Volatile Organic Compounds, and Particulate Matters Emission Due to Cryptocurrency Miners’ Activity in Iran.” Earth, vol. 2, no. 3, 2021, pp. 667–73. Crossref, https://doi.org/10.3390/earth2030039
