“The real problem is not whether machines think but whether men do.”
B. F. Skinner
Do your eyes glaze over when you read anything about cryptocurrency? If so, I am right there with you. But a recent article caught my attention, so I decided to find out more about cryptocurrency and its surprising link to climate change.
Crytpocurrency and energy consumption
Cryptocurrency isn’t regulated by banks or governments, so the transactions need to be verified in another way. This validation of currency is where most of the energy use comes into play.
Most crypto companies use a method called “proof of work” to verify transactions through complex math problems (aka mining). People race and compete using computers to find solutions, because they are rewarded with currency for being the first to solve the problems.
Because of how complex and competitive mining is, it is done mostly in massive computer operation facilities. In regions of the US where these centers are located, there is so much demand for power that grids have been challenged and prices have spiked for customers.
The problem isn’t just how much energy the industry consumes, it’s how fast the need is growing. While some crypto companies get a portion of their energy from renewables, much of it comes from oil and gas. Burning fossil fuels for energy is the main cause of climate change, so this massive and growing use of energy stands in the way of us reaching our climate goals.
A few facts
- Bitcoin, the world’s largest form of crypto, uses more energy than entire countries, like Australia or Norway
- A Bitcoin mine in Texas consumes as much energy as the 300,000 surrounding homes
- Producing the energy Bitcoin needs emits as much CO2 each year as the whole country of Greece
- Somewhere between 0.9% to 1.7% of all energy use in the US is for cryptocurrency
Not all crypto is created equal
Just like with any industry, some crypto companies contribute more to climate change than others. Their impact is based how much energy is used, and where that energy comes from.
The second-largest form of crypto, Ethereum, reduced their energy use by 99.9% by changing the way they validate currency. Moving from “proof of work” to another method called “proof of stake” for verification uses negligible amounts of energy. Several other companies are making strides to reduce energy use and transition to renewable sources.
What can we do?
If you’re considering investing in cryptocurrency, dig a little into the company and how they operate. Try to find one with a low environmental impact. As the cost of renewable energy continues to plummet, investing in sustainable crypto companies can be a win-win.
Let’s do something about climate change. Learn about it. Think about it. Talk about it.