Cryptocurrencies have come a long way from their obscure origins. Even though the mainstream financial world is not completely accepting of digital currency, the digital currency will always be a good investment. For example, let’s look at the meme-based cryptocurrency Dogecoin which skyrocketed over 12,000% since the beginning of 2021.
Consider investors who bought Dogecoin back when it hit an all-time 12,000% will have cashed out big. These days, investors buy Dogecoin or other cryptocurrencies with the hope of another big surge in its price. Moreover, apart from the massive growth in users and price, there is still doubt about the consequences of wide cryptocurrency adoption. One particular speculation is with environmentalists raising concerns about the green-house-emission of mining cryptocurrency.
What is the relation between crypto and climate?
There’s a lot of buzz about cryptocurrency and how lucrative it is, especially when investors buy Dogecoin and sell it to earn a huge profit. Sadly, mining cryptocurrency requires energy – lots of energy. Because of the high energy needed to mine cryptocurrency, scientists and others worry that it might pose a danger to the planet.
This is because of the carbon emission needed to generate enough energy to power the computers needed to perform the complex calculation to verify transactions also known as mining. The BBC reported in 2021 that the cryptocurrency network uses 121 terawatt-hours of electricity every year. This is more than the electricity that powers the entire country of Argentina.
But many cryptocurrency propagators say that cryptocurrencies’ carbon emission is nothing compared to the value they provide. They further believe that the emission of cryptocurrency is still low compared to other industries. Nevertheless, the impact on climate change (big or small) is being used as the rationale by different economies and countries to dissuade people from using digital money.
Why does mining require energy?
The main reason cryptocurrency requires energy for mining is because of the competitive nature of proof-of-work blockchain. So, rather than storing account balances in a central database, the cryptocurrency transactions are recorded by a distributed network of miners who are incentivized with block rewards. So, their specialized computers are in a computational race to record new blocks after solving cryptographic puzzles. While these systems have numerous advantages, it requires much energy-intensive computation compared to centralized currencies.
Mining requires energy to keep track of everything and to keep the network safe using a ledger system called the blockchain. But when you think of the amount of energy cryptocurrency mining requires, it’s discouraging. Back at the start of 2017 mining of Bitcoin was using 6.6 terawatt-hours of power a year. In 2020, it went up to 67-terawatt-hour. Now it has nearly doubled to 121 terawatt-hours.
Fossil fuels and digital currencies
Everything we’ve said so far like miners, investors who buy Dogecoin and everything linked to digital currencies requires fossil fuel in a way that several investors are yet to acknowledge. Research also shows that around 65% of cryptocurrency mining takes place in China. And China is a country that gets most of its electricity by burning coal. In a report by CNBC, cryptocurrency mining accounts for approximately 35.95% million tons of carbon dioxide emission every year.
Generally, coal and other fossil fuel are currently the major sources of electricity worldwide. As such, crypto mining operations and other industries are heavily dependent on fossil fuels. And when you come to think of it, burning coal is a significant contributor to climate change because of the carbon dioxide process produced.
Other environmental impacts of cryptocurrency mining
Apart from carbon dioxide emission to the environment from energy production needed for cryptocurrency mining, mining crypto can impact the environment in other ways. Crypto mining also generates a significant amount of electronic waste in the form of hardware becoming obsolete. This waste can be in the form of Application-Specific Integrated Circuits as well as other specialized hardware for mining popular cryptocurrencies like Bitcoin, Ethereum, Dogecoin, and so on, which makes it easy for investors to buy Dogecoin, Bitcoin, and others with ease.
Importantly, unlike other computer hardware that can be used for other purposes, these circuits specially designed for cryptocurrency mining cannot be reused for other purposes. And to top it off, these circuits quickly become obsolete. In a survey, the Bitcoin network alone produces between 8 to 12 thousand tons of electronic waste every year.
Do you want to buy Dogecoin or any other cryptocurrency, but you’re worried about the GHG effect it has on the environment? Well ease your mind as crypto mining GHG effect is less compared to other industries. It’s also worth noting that since investing in crypto mining is lucrative with negligible environmental consequences, investors should feel free to invest wisely.