Shadley: There’s No Such Thing As ‘Green’ Cryptocurrency
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January 23, 2022
In just seven years, the price of Bitcoin has skyrocketed from roughly $250 to over $42,000. If 15-year-old me had scrounged together $1,000, my whole college tuition and living expenses would have been paid for. I just had to invest a small amount of money in the right place.
Many people feel the same way, and many more feel that their lucky investment will happen eventually. Hoping to follow in the footsteps of people who have become actual billionaires off of Bitcoin, people have become increasingly interested in NFTs and meme coins. Ideally, if you invest in the right dancing unicorn, you could be financially secure for life. It only costs a few hundred dollars, right?
The popularity of cryptocurrency has made lots of lucky people extremely wealthy, which garners a lot of attention. But silently, Bitcoin has burned a massive amount of fossil fuels. As the cryptocurrency market grows, energy demands will follow. That’s a problem when we’re amid the most critical decade for reducing carbon emissions. Proponents of cryptocurrency aren’t deterred, as they argue that we can simply power cryptocurrency with renewable energy. However, using our limited supply of renewable energy to do so is both environmentally and morally reprehensible.
Why Does Cryptocurrency Use So Much Energy?
Bitcoins are, generally, not found in the ground, even though we use “mining” to describe the process of acquiring a Bitcoin. In the context of cryptocurrency, mining happens when a computer solves an extremely complex math problem. For solving that problem, that computer’s owner gets one Bitcoin. To ensure that not too many Bitcoins are in circulation, the math problems grow more and more complex for each additional Bitcoin. So, mining a Bitcoin today requires far more computing power than it did a few years ago, and even more tomorrow. And everyone competes to solve the same math problem, incentivizing speed, which also requires more computing power.
This oversimplified explanation of Bitcoin mining means we need a lot of computers, and a lot more energy to power them.
Bitcoin mining and transactions use more energy than Austria, Switzerland, New Zealand or Pakistan. Yes, Pakistan, the fifth most-populous country in the world, uses less energy than Bitcoin. That energy use doesn’t even factor in other cryptocurrencies. Ethereum, the cryptocurrency that makes NFTs possible, uses more energy than Bangladesh, the eighth-most populous country in the world. Just these two cryptocurrencies combined use more energy than almost 400 million people. Even still, advocates of cryptocurrency worried about its carbon footprint truly think that using renewable energy for it would be an appropriate use of our resources.
Green Energy Cryptocurrency Doesn’t Work
Cryptocurrencies use a massive amount of energy. Most of that energy currently comes from fossil fuels, which we all know hurts our planet. The shift to cleaner, more renewable energy sources comes with its own share of complications.
First, solar and other renewable energy resources require a lot of energy to build. We have to mine rare earth minerals using fossil fuels, and doing so can open up the surrounding communities to various environmental justice concerns. Those issues include worsened air quality near mines, the contamination of drinking water and exposure to radioactive elements.
And while every renewable energy project must contend with this issue, those issues get worse with greater volume. We must not only shift to renewable energy sources but also minimize our energy consumption.
Cutting out superfluous activities is the only way to create a truly sustainable system. Using huge swaths of renewable energy so that you can “own” a dancing alligator is more than just silly and frivolous — it’s actively harming people and our planet.
Minimizing Crypto’s Environmental Impact
In developing nations like Pakistan and Bangladesh, one of the quickest ways to raise the quality of life for the citizens in those countries is to improve access to renewable energy. Rather than using our limited, harmful renewable energy resources to mine for cryptocurrency, I’d rather see it go towards lifting people out of poverty.
We’re left with three options. First, we could allow cryptocurrency to continue to run on fossil fuels. That seems dangerously irresponsible. Alternatively, we could engage in a massive push for renewable energy. But that energy wouldn’t be used to lift people out of poverty, decrease air pollution, grow food, increase public transportation or anything of that nature — instead, all of that energy would solely power cryptocurrencies. We’d also need to continue producing that renewable energy to meet the increasing demand. Our final option is to recognize cryptocurrency as a wasteful, unnecessary system and use our renewable resources for things that actually improve people’s lives. That’s the option I prefer.
Daniel Wells • Jan 25, 2022 at 11:00 am
The author talks about powering cryptocurrenty and discusses fossil fuels and solar + “renewable” energy, while ignoring the scientific solution to the energy/emission crisis: nuclear energy, the cleanest and safest form of energy production on the planet – and given how these articles are usually written, I feel safe assuming that “nuclear” was not lumped in with the term “renewable.”
With nuclear powering our grids, cryptocurrency would have zero emissions, and there would be no shortage of energy for any other infrastructure.
Tom • Jan 25, 2022 at 6:30 am
You’re completely ignoring the fact that PoS systems exist. Yea stuff like solana still use electricity but its on par with the energy used in a google search. Ethereum is also going to a proof of stake system too.
You should look into other crypto solutions, bitcoin might be the biggest but far from the only solution. Hell it’s probably one of the least useful coins out there, only being big due to being the first. I have no doubts that it’ll eventually fall out of favor.
Don • Jan 23, 2022 at 11:03 am
Hey Will,
Agree with your piece with one small caveat: Not all cryptocurrencies pollute and waste electricity.
First, you have to know what mining is. Mining, in the crypto sense, is a method of verifying transactions, which uses a mind boggling amount of energy to process the data which must be assessed. That’s called a “proof of work” consensus method. It’s the one Bitcoin, Ethereum and many, many others employ. It amounts a waste of natural resources and pollution. This is old technology. Bitcoin has been around for about a dozen years now, and their consensus mechanism is antiquated. In addition to wasteful, it is also slow and expensive.
Now, take the Stellar blockchain. It uses what’s called a “Federated Byzantine Agreement” to verify transactions. No electricity needed other than house current for a few nodes. Besides being environmentally friendly, it is lightning fast (transactions resolve in 5 seconds) and cheap (transactions cost a fraction of a cent.) I know because I built a system on Stellar called Monetran. We make transfers anywhere in the world in a few seconds and charge nothing for a B2B or P2P transfer. So, when you contend that “There’s No Such Thing As ‘Green’ Cryptocurrency,” there is, but you have to know about it.
Ben Ruckman • Jan 25, 2022 at 10:12 am
There are also Crypto’s like ThreeFold (TFT), which take a tax on every token mined (more than the energy used), and specifically spend it on green initiatives, like planting trees, and building solar.
He really should do his research before coming out and saying that all crypto bad because a crypto uses electric.