3 Big Environmental Concerns About Crypto – What Can We Do About Them?
Some environmental activists and lawmakers have labeled Bitcoin (BTC) and the like “dirty” industries, reliant on vast quantities of power – much of it fossil fuel-based.
What – if anything – crypto developers and miners can do to clean up their act and win over the hearts and minds of an increasingly environmentally conscious public?
Problem #1: “Crypto Mining is Carbon-intensive”
Up until very recently, this statement was certainly very true. At one point, China was responsible for some 51% of the global BTC hashrate. And most major mining players in the country were masquerading as “Big Data” centers, usually using power from older coal-powered stations in poorer parts of the country.
In September last year, that all changed, however. Early in 2020, China committed itself to go carbon-neutral by 2060. A few months later, Beijing started to hit out at its most polluting provinces, which responded by marginalizing crypto miners. September’s crackdown followed. Many miners relocated to Eastern Europe and Central Asia.
But now these areas, many of which also rely on coal, oil, and gas, are also starting to shun miners after energy shortages, fuel price rises, and power outages. This is driving more and more pools to the Americas. “Green” crypto mining is on the rise in the USA, which is now the world’s de facto BTC mining center of gravity.
And further “green” initiatives could be on the cards in Latin America: Paraguay’s Senate has approved a bill that seeks to allow foreign miners to set up shop at locations such as the Itaipú Dam – the biggest hydroelectric facility in the world. Miners are also setting up shop in Costa Rica, a nation where fossil fuel consumption has been all but eliminated.
Problem #2: Crypto mining is just too energy-intensive
The proof-of-work and proof-of-stake debate has been raging for years in crypto communities. You can get a clearer idea of the differences between the two models of mining by checking out this article.
But, put very basically, proof-of-stake (POS) requires far less energy. The word on the grapevine is that Ethereum, the world’s second-biggest coin and one of the most important blockchain networks (most NFTs, for instance, are minted on the network), will migrate to POS in the months ahead.
The snag is, developers have been saying this about ETH for some time yet, and for environmentalists, the move isn’t coming quickly enough. Also, only a handful of blockchain protocols actually use POS.
The good news, perhaps, is that this small collective includes the likes of Cardano (ADA), one of last year’s breakaway coins and a self-proclaimed ETH competitor. If ETH can successfully make the shift this year, perhaps other developers on different networks will be inspired to follow suit.
Problem #3: Crypto Mining isn’t Worth it
Many eco-activists say that crypto should be shut down, so deep is its environmental cost. But crypto advocates counter that many industries use large amounts of power, but are simply thought to be “worth the environmental cost,” due to the fact that they provide society with so many benefits.
If crypto can provide us with a currency for the Web 3.0 era, might it not, argue some, be worth investing energy in?
This kind of reasoning is actually as old as Bitcoin itself – and can be traced back to none other than BTC’s founder, Satoshi Nakamoto. In 2010, Nakamoto wrote, in response to the accusation that “Bitcoin minting is thermodynamically perverse:”
“The marginal cost of gold mining tends to stay near the price of gold. Gold mining is a waste, but that waste is far less than the utility of having gold available as a medium of exchange. I think the case will be the same for bitcoin. The utility of the exchanges made possible by Bitcoin will far exceed the cost of electricity used. Therefore, not having Bitcoin would be the net waste.”