Ever since Bitcoin, the first cryptocurrency, came on the market in 2009, its value has always fluctuated. As of July 2022, Bitcoin is currently worth $21,256.70 (Source 3). Many forms of cryptocurrency have cropped up in the last several years, with some notable ones being Dogecoin and Etherum. In its essence, cryptocurrency is a form of digital currency in which transactions are verified and recorded using cryptography rather than a centralized authority. Decentralized cryptocurrencies have provided an outlet for personal wealth that is beyond restriction and confiscation, making them popular investments for individuals and companies seeking to mine it. In order to obtain bitcoin, buyers need to participate in bitcoin mining, which is the process by which the bitcoin is both created and accounted for. The backbone of this process is blockchain, in which ‘miners’ compete to register the latest block of transactions by solving cryptographic puzzles and it’s a race for the prize. Miners “receive 6.25 bitcoins per block, which, at current values, are worth more than three hundred thousand dollars” (Source 1). However, cryptocurrency mining uses huge amounts of power, with worldwide bitcoin-mining organizations now using energy at a rate of nearly a hundred and twenty terawatt-hours per year, according to the CBEC, short for the Cambridge Bitcoin Electricity Consumption Index (Source 1). To give some perspective, a single bitcoin transaction uses the same amount of power that the average American household consumes in a month, and is responsible for roughly a million times more carbon than a single Visa transaction (Source 1). Bitcoin-mining operations tend to chase cheap electricity, with the US, China, Russia, and Kazakhstan being hotspots for mining. Digiconomist estimates that the Bitcoin network is responsible for about 73 million tons of carbon dioxide per year - equal to the amounts generated by Turkmenistan. Based on data through July 2022, mining for Ethereum produces an estimated 35.4 million tons of carbon dioxide emissions, the same amount as New Zealand. In the US specifically, there was one case in which a few years ago, miners descended upon Plattsburgh, New York where most of the electricity is derived from hydroelectric dams on the St. Lawrence River. The power is relatively inexpensive, but once bitcoin mining started, “Plattsburgh [used] up its allotment, [and had] to purchase more at higher rates” which “drove up the cost of electricity in the city so dramatically that, in 2018, Plattsburgh enacted a moratorium on new mining operations” (Source 1). Politicians such as Andrew Yang, former presidential and NYC mayoral candidate, has stated that we wants to turn thee city into a cryptocurrency-mining hub. Based off of bitcoin mining impacts, it would offset the work that NYC is doing to protect itself from sea-level rise, with “increased emissions being pretty much the last thing it needs” (Source 2). In addition, mining plays a big role in electronic (e) waste production, with about 36 kilotons of e-waste being annually produced as a byproduct of Bitcoin mining.
The good part is that processing cryptocurrency transactions and minting new coins does not need to be energy-intensive. Bitcoin developers have been working on the Lightning Network, a project which aims to reduce the energy demand of the network by moving most transactions off of blockchain and Ethereum has been transitioning from a proof-of-work to a proof-of-stake algorithm, which aims to reduce the network’s energy demand by 99% (though there are concerns relating risks to the network).
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Written By: Shreya Bhardwaj
Date Published: 07/21/2022
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