How can a form of currency that doesn’t actually exist have such an effect on the world around us? Ask Bitcoin or DogeCoin- both of these are types of cryptocurrencies.
Cryptocurrencies are a metaphorical type of currency that is not overlooked by banks or central authorities. Instead, it is run around a decentralized government called blockchains. The process of getting a “block” is called mining. Miners must register the new block by solving an incredibly complex cryptography puzzle. The first one to the solution receives today, 6.25 bitcoins per block. This is equivalent to more than $300,000. Since the mining process is so complex, companies began setting up mining farms. These farms use lots and lots of energy to try to solve the puzzles as fast as possible.
Instead of having individuals try to crack these puzzles, it turned into a heavy group of specialized computational devices doing the task instead. This complicated process is rewarded by cash, however, this cash cannot cover the cost of harm to the environment. According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin uses just as much power as the whole country of Sweden. One single bitcoin transaction uses as much power as an average American household in a month. Bitcoin is just one out of the vast amount of other cryptocurrencies, so imagine how much power is used by cryptocurrency mining overall. As a world that is in a deep need to cut carbon emissions, cryptocurrency proves to be risky and dangerous to the future of our planet.
Now that we have an overlook at the process of blockchains and cryptography, we can look at the effect of this on the environment. Coming back to the mining farms that use lots of energy to create fast solutions, these farms use specialized computational devices and require a lot of energy, which results in companies tending to look for cheaper energy. Hubs in Russia set their mining farms in cold areas such as Siberia to avoid overheating. If cold areas are required to stop overheating, it is obvious that the mass amount of energy that is being used.
In the United States, a mine went up near the St. Lawrence River which is a big hub for energy for New York. Energy prices went up so high, the mine ended up buying their own power plant. Greenidge Generation Holdings, the firm which owns the mining farm recently went public, allowing everyday people to invest in this farm to create more transactions and operations. The everyday person doesn’t understand the devastating amount of carbon emissions that these plants put out every day. With the more money the firm gets, the more energy will be used for more computational devices to discover more solutions to get more blocks.
As of now, BitCoin only produces as many CO2 emissions as New Zealand but that will only rise if no one intervenes. Furthermore, in 30 years Bitcoin is set to increase global temperatures by 4 degrees Fahrenheit, revealed a paper from the University of Hawaii at Manoa. With other problems, the planet cannot afford that shift. Although cryptocurrencies are fully metaphorical, its effects are devastatingly real on our planet.