Truthout - January 7, 2022
As the price continues to rise, so will the incentive to mine the cryptocurrency, creating a feedback loop that spells trouble for the climate.
For advocates of cryptocurrency, the promise of an economic future that is managed by a blockchain (a decentralized database that is shared among the nodes of a computer network, as opposed to being held in a single location, such as a central bank) is compelling. For anyone paying attention, the rapid expansion of cryptocurrency has been stunning. In 2019, the global cryptocurrency market was approximately $793 million. It’s now expected to reach nearly $5.2 billion by 2026, according to a report by the market research organization Facts and Factors. In just one year — between July 2020 and June 2021 — the global adoption of cryptocurrency surged by more than 880 percent.
But the increasing popularity of cryptocurrency has environmentalists on edge, as the digital “mining” of it creates a massive carbon footprint due to the staggering amount of energy it requires. Based on data from the Bitcoin Energy Consumption Index from Digiconomist, an online tool created by data scientist Alex de Vries, the carbon footprint of Bitcoin, the world’s largest cryptocurrency, is equivalent to that of New Zealand, with both emitting nearly 37 megatons of carbon dioxide into the atmosphere every year, according to a February 2021 CNBC article.
To understand why this is a problem, it’s important to explain what goes into creating a cryptocurrency like Bitcoin. Unlike fiat money, which is regulated through central banks, transactions in Bitcoin are tracked through a public ledger consisting of a network of computers around the world: the blockchain. “Mining” — a process in which computational puzzles are solved in order to verify transactions between users, which are then added to the blockchain — allows this validation process to take place, which is an energy-intensive process.
Read full report at Truthout