Introduction
Cryptocurrency mining environmental impact can be far-reaching. It can affect the environmental ecosystem by increasing the carbon footprint in the air, polluting the water bodies, and increasing landfills.
Certain mechanisms and procedures in cryptocurrency production can be harmful to the overall environment. The use of highly powerful computers requires the consumption of excessive amounts of energy.
In fact, the pollution generated by Bitcoin mining alone equals the carbon footprint some countries generate annually.
However, stopping these negative impacts won’t require stopping cryptocurrency production entirely.
Also, there are sustainable ways of producing cryptocurrencies. In this article, we’ve explored the environmental impacts of cryptocurrency production. Read more to find out.
Cryptocurrency Mining Environmental Impact
Cryptocurrency mining and managing the blockchain requires lots of energy. It’s an energy-intensive process where the Bitcoin mining companies use a lot of fossil fuel. However, it’s not easy to find out the predominant sources of cryptocurrency mining.
But experts can always trace the carbon footprints of the country where crypto is being mined. The only way to reduce this extensive amount of pollution is to find more suitable and environmentally friendly energy sources.
Key Factors to Remember
There’s a serious reason why cryptocurrency mining environmental impact can be severe. Here’s a picture to help you understand better –
As per Digiconomist, the Bitcoin network causes 55 million tons of CO2 emissions every year. This amount is equal to what Singapore as a city generates.
Ethereum also produced almost 35.4 million tons of CO2. However, this is the amount of CO2 consumption before Ethereum moved to a PoS-based cryptocurrency.
Here are some important factors about cryptocurrency mining being dangerous for the environment.
Greed Fueling Environmental Pollution
It’s always greed that is behind something that impacts the overall environment. The same goes for cryptocurrency. Many miners started to mine Bitcoin and other cryptocurrencies fueled by the initial spike in its value. The proof of work consensus mechanism used for Bitcoin mining adjusted the necessary amount of power based on the network’s power.
When the network is more powerful, it requires more power to mine cryptocurrency out of it. Hence, pollution rises with more fossil fuel energy consumption.
However, the Bitcoin mining process has become easier with the fastest and strongest computers. So, people with resources invested significantly in fast devices to mine cryptocurrency, which added to the environmental pollution.
Carbon Footprint: The Invisible Pollutant
This point is synonymous with the previous point. However, the increasing carbon footprint due to cryptocurrency mining requires some level of carbon emission. The vast energy consumption of cryptocurrency can result in significant emissions of carbon dioxide.
In fact, Bitcoin mining is said to emit 86 megatons every year. With this level of carbon dioxide emission coming only from Bitcoin, we can say that it has a significant impact on the environment.
Creating electronic Waste
Cryptocurrency mining hardware is expensive as they are easily dispensable. Some cryptocurrency mining hardware goes obsolete after a short period of use.
So, it’s safe to say that cryptocurrencies add to the rapid creation of electronic Waste.
As per Digiconomics, the production of Bitcoin has generated 10.52 kilotons of electronic Waste till August of 2024.
It’s a mistake to limit cryptocurrency mining environmental impact merely to increase carbon footprints and Electronic Waste. In fact, many currencies have also boosted water footprints across the world.
Leaving Water Footprints
Large Bitcoin mining farms are using water to cool down the systems responsible for mining Bitcoin. Large mining farms often discharge massive amounts of warm or hot water into different natural water bodies.
This is making Bio organisms in water bodies like rivers, lakes, and the ocean face significant levels of pollution. More research is needed on how much water is needed to cool down these systems.
However, there’s no doubt that the overconsumption of energy is harming many water bodies. It can affect the overall environmental ecosystem by polluting water in the long run.
Landfills and Degradations
With excessive levels of electronic waste coming out of cryptocurrency farms, the number of landfills is increasing. In fact, the construction of mining facilities requires cutting down vegetation, leading to land degradation. It’s causing habitat loss for many species.
The impact can lead to disruption of local ecosystems in different parts of the world and displace wildlife. It’s a concerning issue for areas with rich biodiversity.
Strategies to Reduce Cryptocurrency Mining’s Environmental Impact
Although several operations of cryptocurrencies can cause increasing environmental impact, it’s necessary to consider possible solutions.
Here are some common solutions leading cryptocurrency platforms like Coinfomania are advocating as solutions. In fact, different farms and the governments are already taking joint initiatives toward a common goal to solve this environmental issue.
Choosing a Better Consensus Mechanism
One solution could be the choice of a better consensus mechanism. Earlier, cryptocurrencies relied on consensus mechanisms like Proof of Work, which requires solving difficult computational problems.
As a result, miners had to use powerful computers that consume a high amount of energy.
But, miners can opt for better alternatives like Proof-of-Stake or Proof-of-Authority. These methods are better and more energy efficient.
Use of Sustainable Energy
Most of the pollution connected to cryptocurrency mining happens due to the use of fossil fuels. However, there’s a way to reduce that. Sustainable energy sources like wind, solar, and other renewable energy sources can help reduce that.
With these sources, cryptocurrency mining farms can reduce their ecological footprints. In fact, the trend of using renewable energy for crypto mining has already started in areas like Canada and Iceland.
Technological Innovations
Layer 2 solutions in cryptocurrency mining and operations can help reduce cryptocurrency mining’s environmental impact.
Layer 2 solutions and sharding as new technologies can reduce energy consumption during mining. Options like Lightning Network of Bitcoin help hold transactions off-chain. We can say the same about the Optimistic Rollups of Ethereum.
Also, shading helps divide the blockchain into small blocks where it’s easier to run all transactions. It improves transaction speed while also making the process eco-friendly and energy efficient.
Sustainability-Focused Crypto Projects
Many sustainability-focused cryptocurrency projects are improving the world of crypto. These are eco-friendly projects that positively affect the environment. A good project to remember would be SolarCoin. It’s a cryptocurrency that rewards people with cryptocurrency for every single unit of solar energy they produce.
Eco-friendly E-Currency!
Yes, it’s possible to develop cryptocurrencies without creating so many landfills from electronic Waste or leaving carbon footprints. In this article, we’ve already shared some actionable ways of reducing the negative impact of mining crypto. Some countries and regulatory bodies have also started taking initiatives toward a more sophisticated and sustainable approach.
A better world awaits us as we start to embrace more eco-friendly decisions regarding the use of technology.
