Cryptocurrencies: what impact for the environment?

In the face of the climate emergency, a new conviction emerges, that of a change to the digital age for the good of the planet. However, new technologies, and in particular cryptocurrencies, consume a lot of energy, often fossil.

Digital pollution on the rise

Cryptocurrencies are stored in digital databases that consume a lot of energy. These storage centers multiply at the rate of digital information being produced and require large amounts of electricity to power them and water to cool them down. The significant consumption of electricity spent for mining cryptocurrencies is striking, especially since it comes mainly from the combustion of fossil fuels such as coal. To “mine” them, computers solve complex mathematical formulas and use resources like rare metals used in graphics cards, which can cause shortages.

“The significant consumption of electricity spent on cryptocurrency mining is striking”

Bitcoin, the flagship cryptocurrency, has become the digital asset of choice and its expansion has sparked a digital gold rush that requires thousands of continuously operating data centers. More than two-thirds of mining takes place in Asia and in particular in China, due to the low operating costs of coal-fired power plants. As a result of the negative environmental impact of mining, China in 2021 cracked down on these activities and declared all cryptocurrency-related transactions illegal. A measure that suggests that behind this decision there are also political reasons of monetary sovereignty. Thus, a large number of minors have found refuge in neighboring countries, such as Vietnam.

Denounced by Digiconomist -a platform that reports on the unwanted consequences of digital activities-, this pollution has reached a peak in energy consumption since January 2022. According to calculations by Selectra, the annual values ​​in terawatt hours (TWh) for the Bitcoin’s energy consumption, which increased to just over 7 TWh per year in 2017, exceeded 134 TWh in January 2022. Bill Gates also stated in 2021: “Bitcoin is bad for the climate”Similarly, Elon Musk explained that Tesla would no longer accept payments in bitcoins for the same reason. The head of the auto giant finally qualified his comments by explaining that he would reconsider his position if bitcoin became more environmentally friendly.

Renewable energies pave the way for improvement

Hope is reborn with the possibility of reducing the carbon footprint of bitcoin in the event that the computers that mine the currency are powered by electricity from renewable energies. In addition, the Ethereum Foundation has announced that it wants to change the way its cryptocurrency works, moving from a so-called work test » (proof of work) to a system of proof of stake » (proof of participation). A new method that does not require complex calculations and therefore consumes less energy.

“Hope is reborn with the possibility of reducing bitcoin’s carbon footprint”

Many actors seek to solve this main obstacle of overconsumption of energy. The University of Cambridge, for example, is continually working on reports aimed at providing an objective analysis of the impact of cryptocurrencies in all its facets, and in particular at an environmental level. Green initiatives are multiplying to reduce energy consumption and CO emissionstwo. More and more cryptocurrencies, such as SolarCoin or EcoCoin, are emerging with ecological and ethical considerations, thus rebalancing the negative image of bitcoin and calming the environmental ardor.

juliet woods

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