People have been sounding the alarm bells about cryptocurrency’s carbon footprint problem for months now, particularly when it comes to Bitcoin. According to a December article in Wired, Bitcoin’s algorithms were not exactly designed with energy efficiency in mind: “But what they might not have accounted for is how much of an energy suck the computer network behind bitcoin could one day become. Simply put, bitcoin is slowing the effort to achieve a rapid transition away from fossil fuels. What’s more, this is just the beginning. Given its rapidly growing climate footprint, bitcoin is a malignant development, and it’s getting worse.”
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The main reason for this is the structure build into Bitcoin to help it be self-limiting. In order to prevent Bitcoin from growing too fast Bitcoin mining operations must solve problems that become more and more complicated over time, thus controlling the supply of the currency on the market and slowing its growth. Unfortunately all that computing power means more energy used with each transaction. That Wired article reports that the amount of energy used in each Bitcoin transaction today amounts to the power it takes to keep nine U.S. homes up and running for a day. What’s more, people are doing some tricky and even illegal things to power their Bitcoin mining operations, from rigging up Tesla cars to suck power from the charging stations to causing rolling blackouts in places like Venezuela.
The good news is that not all cryptocurrencies are built this way, and it’s also not too late to reverse this trend and do something about the efficiency issues. One company bought all the land around the Tesla Gigafactory, and if they were able to tie in to Tesla’s solar powered grid to run crypto operations that would be a major game changer for the carbon footprint of the entire industry. In China some Bitcoin miners are pulling straight from a hydroelectric dam, which, while a clean resource, is likely adding to the power burden elsewhere. But there are still many opportunities to clean up crypto’s act.
When the Internet first came out there was talk about how much energy it was going to use, but the world has adapted to that. Using this historic precedent we can move forward with building more energy efficient blockchains and cryptocurrencies before crypto’s carbon footprint problem gets out of hand. Learn more about crypto’s carbon footprint from this infographic!