The rise of digital currency is exciting and certainly pioneering. However, there’s an environmental cost that the current climate crisis may not be able to absorb.
There may not be a more controversial technology on the planet. Cryptocurrency has invited plenty of criticism for a number of reasons, including its volatility, its users’ penchant for making illegal purchases with it, and its apparent failure to be used as a viable payment option. However, the most damaging charge against it might just be its outsized environmental impact.
Bitcoin mining is energy-intensive, but it’s also a crucial part of crypto’s existence. Mining is the process of checking the blockchain of cryptocurrencies, essentially tracking transactions and trades and checking that those transactions are accurate. While it’s possible to mine on a personal computer, the vast majority of mining activity is done by massive computing systems. Experts have calculated that mining consumes 120 TWh, which is about the same as a small country. That’s about .59% of global energy consumption.
Advocates counter that the freedom of currency provided by crypto is worth the energy footprint, even though it isn’t actually used as payment in normal, day-to-day transactions. Perhaps the most high-profile business to accept Bitcoin as payment was Tesla, though even that country recently announced they’d no longer accept cryptocurrency as payment. In fact, Tesla CEO Elon Musk noted climate concerns as one of the factors in his company’s decision.
It’s also worth comparing its energy use in context. If crypto were a country, it would be rank 28th on the energy consumption list, right on par with Ukraine and Argentina. But these comparisons aren’t terribly useful, even if they’re alarming. The real debate should be focused on the alternatives. Gold and silver have served as the base of currencies around the globe for centuries, and before paper money, they were currency in most parts of the world.
Gold is no angel itself, generating slightly more than 130 TWh per year, right on par with cryptocurrency. As some point out, much of that output doesn’t actually get put to use securing currency; the wedding band on your finger generated over 20 tons of waste and contributes little to international finance (though it certainly has sentimental value). Gold does have more real-world applications than bitcoin, especially in electronics, which may make it more versatile than the intangible bitcoin generated by miners.
The answer may not be whether gold-backed currencies or digital currency like Bitcoin is more or less environmentally, but which can be made more environmentally friendly. Both industries need to invest heavily in renewable energy, especially as more national governments are looking to create their own digital currencies backed by their actual currency, though possibly tracked and confirmed through something like blockchain. We also need to encourage more innovative ways to support tech, including load shifting between data centers as Google has recently proposed.
As the world fights to find the answer to the climate crisis while still meeting energy demands, every option and every industry needs to be on the table, even if it means pushing some onto the cutting room floor.
Ready to do your part? Contact Keen to learn how we can reduce your energy costs and environmental impact.