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The Impact of Cryptocurrencies on the Environment

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Since the world started to speak up about combating climate change, the conversation has always been based on aspects like farming. Also, fossil fuel use, mechanical cars, and even industrial pollution from different key players have always been discussed. But one thing has always been missing, which is the crypto industry.

 

Recently, more discussions about this sector have been increasing, focusing on reducing the impact of cryptocurrencies on the environment. If you would like to learn more about this, we have created this article for you. You will discover new insights into the impact of cryptocurrencies on the environment, the countries with the most impact, and how to improve environmental preservation.

 

Impact of Cryptocurrencies on the Environment

Digiconomist

 

The carbon footprint of cryptocurrencies is easy to evaluate since the process is centralized, the majority is caused by crypto mining. In most cases, miners leverage many energy sources to mine more cryptocurrencies. In the case of China, some miners even had to activate closed-down coal plants for crypto mining illegally.

 

According to experts, this impact on the environment is that 73 million tons of carbon dioxide per year are released into the atmosphere. To show you how important it is for cryptocurrencies to leave the proof-of-work model, Ethereum produced an estimated 35.4 million tons of carbon dioxide emissions. Then the blockchain transitioned to proof-of-stake, reducing these carbon emissions to a whopping 0.01 million tons.

 

Besides the emissions, you should also know that crypto activities can result in a large percentage of environmental waste. According to data from Digiconomist, an estimated 60 thousand tons of electronic waste is produced by the Bitcoin network alone in a year. Environmental wastes are often a result of disposed hardware that is no longer functional in the industry, these should be properly recycled.

Countries With the Impact of Crypto On the Environment

Digiconomist

 

Some countries are generally more affected when it comes to the impact of cryptocurrencies on the environment. Especially for technologically advanced countries, they top the list of affected countries.

 

The US, China, and Kazakhstan are the top locations where crypto mining takes place, and in the same way, they are more affected by the activity. Nevertheless, one of the trends to notice about these three countries is how they are heavily dependent on fossil and crude oil power generation.

 

Adding crypto activities such as mining to the mix further harms the environment. For instance, about 38% of mining occurs in the United States, while China represents 21% of the global hash rate. On the other hand, Kazakhstan represents 13% of the world’s Bitcoin mining and is heavily dependent on fossil fuels to sustain this activity. Countries like this are the most affected by this activity.

 

How To Solve the Impact of Crypto On the Environment

·       Switching to Proof-of-stake

Cryptocurrencies using the proof-of-work model are one of the issues causing the release of harmful gasses into the environment. The method in which the proof-of-work model works makes the crypto industry release bad energy into the atmosphere. Proof-of-work blockchain relies on mining to mint new tokens. In other words, miners have to use sophisticated tools that depend very much on fossil power and other energy sources to provide power for mining.

 

However, a blockchain switching to the proof-of-stake protocol will help reduce the dependence on fossil and other harmful energy sources. Instead of mining, the proof-of-stake relies on staking to approve transactions in the network. Instead of using fossil and other dangerous energy sources, the PoS ecosystem usually requires a working smartphone with an internet connection. Ethereum was formerly a proof-of-work blockchain, but it switched during the Ethereum 2.0 to become a proof-of-stake protocol. This greatly reduces the impact of cryptocurrencies on the environment.

·       Choosing Renewable Energy

Moving to Renewable energy is something many Bitcoin and other crypto miners should seriously consider. Most miners use harmful energy sources like coal for mining. In other scenarios, these miners combine some renewable energy sources with harmful ones.

 

For instance, research shows that some Bitcoin miners in China often use hydropower from the South of China during the summer months. And then, they move to using harmful coal-based energy sources for the rest of the year. Crypto miners should completely switch to renewable energy sources such as solar and wind power. Some technologies involving hydropower can also serve similar purposes.

·       Governmental Policies

Ultimately, the environment is very important and must be protected at all costs. Government policies could be leveraged to restrict the activities of crypto miners unwilling to follow stringent guidelines to reduce the impact of mining within the environment. Tax impositions and ban rules are also available options governments can leverage for offenders while offering tax benefits to those using renewable energy sources for crypto projects and developments.

Way Forward?

The environment is essential to our lives and should be protected to ensure harmful substances and energy do not destroy it. While some parts of the environment have been destroyed due to this harmful energy, things can get better and be avoided.

 

Governmental policies, proof-of-stake networks, and the use of renewable energy are some of the potential options as economic stability is in our global interest.