In recent years cryptocurrency has gone mainstream. There are more and more businesses accepting the likes of Bitcoin and Ethereum as a payment option – and more people looking into investing in cryptocurrency as a whole. Obviously these digital currencies are not bad for the environment in themselves. But the practice of mining for them most definitely is.
It seems as though the use of Bitcoin and other cryptocurrencies will only become more common in the years ahead. When you can pay for everyday goods and services with digital currency and even use Bitcoin betting sites, it is clear that something has to change. But how can we make crypto greener?
The State of Play
As we said, crypto isn’t inherently unsustainable or bad for the planet. But the way in which we are able to produce more coins goes against the general consensus that our carbon footprint has to be reduced. The problem is that the mining that is required is very energy-intensive.
Very high-powered computers are used when completing transactions. That is on top of the amount of electricity used to power the computer algorithms. Much of the mining for Bitcoin, in particular, is carried out in China – which also happens to be heavily reliant on coal and fossil fuels that we know have a serious impact. For those interested in the current dynamics, prices, and trends of Bitcoin, you can look here for more details.
The good news is that there is something that can be done to make cryptocurrencies more environmentally sustainable. The first thing that could be introduced on a wider scale is to simply use smarter technology. This is based on the same idea that has already become common in our own homes.
Smart technology is already looking after our heating and lighting, for example. By introducing the same technology to crypto mining, it can become a more energy-efficient process. As with any kind of environmental project, this needs to be done alongside other green projects.
This is sometimes seen as a controversial subject when it comes to sustainability. One argument is that you are not stopping the actual problem, only ‘making up for it’ in another way. But if nothing else is being done to combat environmentally damaging processes, surely this has to be part of the solution.
The idea of carbon offsets when it comes to digital currency is that those companies involved in unsustainable mining techniques can also donate and fund greener programs, such as tree planting. This can cancel out the harmful effects and help build towards a greener future.
There are others involved in the digital currency world that is being more proactive about a sustainable solution though. Bitcoin is the biggest and most well known cryptocurrency in the world – but it is also, unfortunately, the worst for the environment. New digital currencies are trying to work in a different way.
Obviously there is a smaller carbon footprint with smaller currencies, but there are some that are using different processes for mining. Using proof of stake, rather than proof of work, currencies such as Chia and Cardano are much more energy-efficient. There are other coins that reward environmentally positive actions with digital currency.
A More Eco-Friendly Crypto Future
The positive way of looking at the environmental situation with cryptocurrencies is that there are some people that are already doing something about it. Even Ethereum, the second largest blockchain, has moved to a proof of stake system – so it is not just something that is happening on the fringes.
Unfortunately, Bitcoin is unlikely to ever change the way it is mined. But with the younger generations demanding more sustainability in the products that they use and consume, there could be a shift in dynamics in the near future. Switching to more renewable energy sources would help as well and those involved in the industry will hopefully realise that their practices can be adopted to help a greener future.