Some in the cryptocurrency industry have joined the likes of the world's electrical grid as they hurry to pivot towards renewable energy sources to reduce carbon emissions. The Crypto Climate Accord, based on the Paris Climate Agreements, is a private-sector led initiative that seeks to make cryptocurrency mining completely net-zero emissions by the year 2040.
The popularity of Bitcoin has skyrocketed over the past year, following the same trend as its price. As cryptocurrency has become more popular, so has the process of mining for it.
These complex quantitative computations that mining rigs are needed to undertake -- thousands of times in a second or even more -- in order to reward the miner with a BTC token come at high costs.
While companies are experimenting with solar, nuclear, and geothermal power to make the shift to renewables, the ubiquity and scalability of hydropower are quickly growing to be a big draw for some companies.
The United States-based companies like Bit Digital and BlockFusion are now establishing mining facilities near sources of hydroelectricity to reduce their carbon emissions. Bit Digital and BlockFusion, in particular, are using the energy supplies by the Robert Moses Niagara Power Plant.
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Power Guzzling Bitcoin
Several studies suggest Bitcoin mining can consume more than 100 TWh of energy each year, most of which is sourced from non-renewable means. This puts Bitcoin’s power draw higher than countries like Finland and Argentina.
The largest cryptocurrency’s energy draw and subsequent environmental impact were even troubled billionaire Elon Musk. Musk, a longtime supporter of cryptocurrency, cited Bitcoin’s energy impact as a reason for dropping the token as a valid way for paying for Tesla cars.
With the way Bitcoin is structured, there is only a finite supply of Bitcoin that can be mined. And as miners quickly approach that upper limit the energy requirements for mining each token is only going to increase.
It is no surprise then that many studies have stated Bitcoin alone can lead to a 2 degree Celsius increase in the temperature of Earth by 2040 at current emission levels.
Not a rosy picture for future
Though the cryptocurrency companies are looking to shift to renewable sources of energy, their direct energy consumption is just one of the sources of emission among many other elements used by the entire digital coin industry.
Emission for production of all the electronics used and their subsequent waste is often ignored, including a large number of semiconductor chips, production of which is a notoriously polluting process.
Cryptocurrency’s environmental effects were one of the many reasons behind China’s strict crackdown against all things related to cryptocurrency. The cryptocurrency mining sector in China, especially in its remote regions, had particularly seen a boom due to the availability of cheap hydroelectricity.
But despite the sector’s use of renewable energy in the country, the environmental costs are becoming too much to bear.
(Edited by : Yashi Gupta)
First Published: IST
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