Cryptocurrency continues to be one of the hottest topics in the investment community, but actually obtaining the currency may have implications many don’t really think about. The International Monetary Fund states that energy consumption for Bitcoin and Ethereum mining may exceed that of Argentina in 2018.
The Rocky Path Of Cryptocurrency
When Bitcoin first came onto the scene several years ago, it was an unprecedented form of investment that raised a lot of questions in the financial community. To this day, many of the people who are investing in cryptocurrency are unaware of the process required to actually obtain more of these coins, instead hoping to buy low and sell high. With the energy expenditures from Bitcoin and Ethereum mining increasing as more and more people try to take advantage of the opportunity for quick profits, there’s an environmental impact that many are calling wasteful.
The viability of Bitcoin and Ethereum mining for a profit has even been called into question, considering how volatile the market has been. While the cryptocurrency market reached record highs back in December, it proceeded to go through a major crash in early January from which it still has yet to recover. Bitcoin and Ethereum mining expends a good amount of energy due to the taxing requirements on the GPU, and depending on the current price, many taking part in the process aren’t actually even breaking even.
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Bitcoin in particular has been facing some major challenges that may soon radiate out into the rest of the community, making Bitcoin and Ethereum mining even less attractive. As the largest cryptocurrency and the only one with widespread recognition in the public eye, many governments and other regulatory bodies have focused their ire on the top dog in this unprecedented investment scene. Information has come out from multiple governments that specifically target Bitcoin and Ethereum mining, with the most notable coming from China. A recently leaked document suggests that the country will soon be increasing fees for Bitcoin and Ethereum mining organizations that are taking advantage of the companies low utility fees in order to turn a profit.
Outside of initially purchasing the GPU required in order to take part in Bitcoin and Ethereum mining, the main expense from obtaining more of these coins is the electricity costs. While many are willing to foot the higher energy bills if they’re still turning a profit, the fact remains that the energy to power that mining has to come from somewhere, and the amount of generation required to keep up with Bitcoin and Ethereum mining is astronomical.
Bitcoin and Ethereum Mining: An Environmental Problem
As mentioned above, the International Monetary Fund (IMF) has given us a clear picture of the energy concerns that Bitcoin and Ethereum mining are causing around the world. IMF Chief Christine Lagarde stated in an interview with Bloomberg at the World Economic Forum in Davos that “The bitcoins mining, which is this accelerated and augmented use of computers to actually determine the value and incentive the functioning of the mechanism, is energy angry…And we figure that in 2018, if it continues, that system will actually consume as much electricity as Argentina.”
The fact that the energy consumption from Bitcoin and Ethereum mining could potentially eclipse that of an entire country is concerning, and Bloomberg warns of the “extreme carbon footprint for each unique bitcoin transaction.”
While it may be easy for many to justify spending extra on a monthly energy bill if they end up turning a profit, the fact remains that the energy for Bitcoin and Ethereum mining has to come from somewhere. Energy is not limitless, and the majority of it isn’t clean and has a significant impact on our environment. By demanding more energy worldwide than that of an entire country, these minors are indirectly contributing to climate change and global warming.
“In times of climate change and when we look at how much coal is being used in some Chinese provinces to actually mine bitcoin, it’s a big concern.” Lagarde said.
While the majority of countries are focusing on regulating cryptocurrencies based off of the volatility and risk involved in their financial estimates, it may not be too long before the environmental implications of Bitcoin and Ethereum mining take center stage. While many governments haven’t exactly been very proactive when it comes to conserving energy and reducing the effects of global warming, a lot of people in influential positions are nervous about cryptocurrency due to the unprecedented nature of these new types of investment; this could be another nail in the coffin for the dominance of large cryptocurrencies like Bitcoin and Ethereum.
It’s unlikely that cryptocurrency will ever completely disappear due to its relative staying power and massive growth over the past few years, but the potential for new regulation could potentially stifle the growth of these currencies and put a damper on their uncontrollable growth. If Bitcoin and Ethereum mining starts to become less profitable, the amount of large organizations dedicated to the practice that are consuming massive amounts of power may start to decrease. This would be a good thing for the environment but would lead to a lower supply of coins overall – possibly leading to a spike in value in a market almost entirely regulated by supply and demand.