Cryptocurrency Mining & Its Impact On The Environment

Is the practice of mining cryptocurrency grim for our environment? Is it doing violence to it?  

Let’s read on to find out!

Over the past ten years, Cryptocurrency has clinched much fame and been espoused by many. At present, the total currency market cap has attained over three trillion dollars, with Bitcoin’s price in early 2022 virtually twice what it was last year! Excited by crypto, millions of people are planning to invest in it Without Rigorously Understanding or Considering the Collateral Environmental Impact. Many environmental and social activists have claimed that digital currency is toxic to the environment and has a high carbon footprint!

Crypto’s most apparent environmental impact is the electricity needed for mining to create new digital coins. Many forms of cryptos hinge on mining. Mining is used by the two most accepted cryptocurrencies, Bitcoin and Ethereum. Bitcoin, being the most widely-mined cryptocurrency network, uses a Monstrous Amount of Energy!

How Much Energy Does Mining Take Up?

There’s no direct way to compute the energy used in the mining process. However, the figure can be approximated from the network’s hash rate plus the consumption of commercially-available mining rigs. Recently, the Cambridge Bitcoin Electricity Consumption Indexroughly calculated that Bitcoin used an estimated 26.73 TWh of electricity annually and 167.72 TWh via energy assets at the production point. The CBECI also estimated that Bitcoin mining uses more energy annually than countries like Pakistan and Netherlands.

Another statistic exhibits that 204.5 TWh of energy was utilized through May 2022 for Bitcoin mining. This statistic computes that around 2214.09 kWh of electricity is burnt for a single Bitcoin transaction, enough to power an average American household for over 75.89 days.

Besides, the next largest crypto network, Ethereum, used an estimated 85.78 TWh of electricity annually, based on energy consumption through May 2022. The average Ethereum transaction uses 215.92 kWh of energy, equivalent to the power consumed by an average U.S household in 7.3 days!

The amount of power utilized by mining cryptocurrency will probably increase gradually, assuming that costs and user adoption continue to grow. Higher crypto costs connote more power being used by digital currency networks.

Why Does Mining Cryptos Require Mighty Power?

Since a central authority doesn’t regulate cryptos, the blockchain counts on its users to ratify transactions and upgrade the blockchain with new blocks of information. These blockchains must be quite gnarly and over the odds to verify them to prevent con artists from attempting to manipulate the updated information. Thus, Proof of Work (PoW) was implemented into most cryptocurrencies.

PoW is the most widely used consensus mechanism that permits users to validate cryptocurrency transactions by solving a complicated mathematical problem. It is a heavily energy-intensive process. Bitcoin and Ethereum, the two most popular cryptos, operate on the PoW system, which counts on its users to solve diverse equations to mine new coins and then add new blocks of information to the crypto’s blockchain.

When someone mines cryptocurrency, they’re running programs on their computer trying to crack a mathematical problem – the more powerful their computer, the greater their chance of winning the right to update the blockchain. Consequently, mine operators are motivated to boost their mining power to compete better with their competitors. The first person that solves the puzzle validates the transaction and is rewarded a fixed amount of crypto.

Traditionally, heavy computer processing power drives crypto mining. If your processor is working hard, your machine gets warm. This phenomenon is known as Computer Processing Power, which you can tangibly feel. Let’s have a look at the example of Bitcoin, in which more than 100,000 nodes (computer groupings) worldwide are vying to win the race, and doing this, they can earn 6.25 Bitcoin (that’s approximately $237,500 today) for their ability to add a grouping of transactions to the next block on the chain. It happens around every 10 minutes!

Every time more people mine more Bitcoin, the competition spirals. It then demands more machines on the market, making it more difficult to mine Bitcoin. And, now you have a competition going on, with increased devices, mining, and competing!

What Else Crypto-Mining Is Doing That Is Detrimental To The Environment?

On top of everything else, the Bitcoin network is generating hulking amounts of physical electronic waste (e-waste). Crypto-miners invest in mining rigs (i.e., fast computers and processors) to the nth degree! Purpose-built ASIC rigs, graphics cards, computers, and more are being used for crypto mining.

Since intensified computing power translates to a benefit in the race to mine more coins, participants are now incessantly upgrading and jettisoning used equipment, producing up to 30,000 tons of e-waste each year. That’s such a hefty figure! Not only that, some economists have found that only one transaction is enough to produce as much waste as throwing away two iPhones because of the short lifespan of ‘mining computers’.

The reason behind the generation of much e-waste is that to mine Bitcoin, specialized (singular purpose) hardware is used, which becomes obsolete about every 1.5 years. Participants who compete to create a new block based on the crypto’s blockchain will be rewarded with a monetary reward directly proportional to their share of the total computational power. That’s why the Bitcoin E-Waste Monitor was brought into existence to give an insight into the quantity of e-waste brought about by this network.

However, to reduce electronic waste, Ethereum is working to shift from PoW to a new mining method known as Proof of Stake (PoS), which can be performed on regular computers. This method is far more energy-efficient than PoW and should be encouraged!

Closing Thoughts

The PoW method to mine cryptocurrency is way too resource-intensive and costs our environment. That’s because it eats up loads of computing power! Other cryptocurrencies use different methods to verify transactions, which is why they could be less energy demanding than Bitcoin.

Additionally, crypto-miners must deeply learn about crypto options so they can easily decide not to use one crypto and go for another that is more environmentally sound and doesn’t use PoW. The other options can be explored – But it only depends on how you educate yourself to see the broader alternatives and choose among them!

Author avatar
Ramsha Khanum
Hi, my name is Ramsha. And I'm a Content Wizard at Intelvue, who plays with words and writes enthusiastically with an ultimate focus on producing legit, quality Tech blogs.
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