Fact or Fiction: Crypto is terrible for the environment
One of the biggest criticisms of cryptocurrency is the high level of energy required to produce it. Similar to mining gold, or printing money, the production, or “mining”, of cryptocurrencies such as Bitcoin does require the use of resources. This has been top of mind lately following the Tesla fiasco, when Elon Musk announced that Tesla would accept Bitcoin as payment, and then backtracked shortly after, citing the environmental impacts of Bitcoin.
You may have heard terrifying stats such as the one released by the University of Cambridge Bitcoin Electricity Index, that found the energy consumption of Bitcoin to be more than 129.24 TWh per year, or more than some countries including Argentina or Ukraine. Another concerning statistic is that Bitcoin mining generates as much CO2 in 30 months as 1 million cars would in the same period. These are certainly alarming statistics. Now as a crypto enthusiast you may think I’m about to tell you not to worry about this, and that I will make a case for why this isn’t a big deal. Well, that’s not the case, because it is a big deal. It is important for us to acknowledge this, and to decide how to address it and move forward.
This is not meant to be interpreted as an insult to Bitcoin enthusiasts or miners, and it doesn’t undermine the case for Bitcoin as a solid store of value. In fact, both can be true. Bitcoin can be a revolutionary force in the decentralization of the world's financial systems, and at the same time, it can have a pressing challenge that needs to be addressed.
One of the common counterarguments in support of Bitcoin is that the mining of gold, and the operations of the world’s legacy financial systems, are both terrible for the environment, and that Bitcoin is the lesser evil when it comes to environmental impact. So, let’s explore that. First, we will start with gold.
Looking purely at energy consumption, one independent study found that it takes more than three times the energy to produce $1 worth of bitcoin (at the time of the study), as it does to mine $1 worth of gold. However, this is likely a conservative estimate, as another study found that gold used an estimated 240 TWh per year. Even if we went with the conservative estimate, and assumed that bitcoin was more energy intensive, this doesn’t paint the full picture of the environmental impacts of gold mining. Beyond energy usage, the mining of gold also produces excessive solid waste. According to Earthworks, the mining and production of the gold needed for one wedding ring can result in 20 tons of waste, and a common process for mining known as “Heap Leaching,” results in 99.99% of the heap becoming waste. They also highlight many additional environmental impacts including poisoned drinking water, the destruction of ecosystems, and the release of toxic pollutants. Gold mining certainly isn’t sounding very environmentally friendly.
Oh, and then there are the potential social and community impacts including the destruction of Indigenous lands, workers safety issues, human rights abuses, you get the point. Gold mining is objectively terrible for the environment. Really, really, really, terrible. Now, let’s move on to the impacts of the legacy banking systems on the environment.
It's important to consider the massive footprint of the world’s banks. First, there of course the hundreds of thousands of bank branches and the estimated 3.5 million ATMs. Then there are the head offices in towering skyscrapers, and all the background infrastructure, such as data centres that keep the financial networks running. When looking at the massive infrastructure of the global banking system, one study found the worldwide electricity consumption of the global banking system to be 263 TWh per year. This same study also produced a lower estimate of Bitcoin’s electricity consumption at 113.89 TWh per year, but whatever estimate you use, the worlds banks use roughly double the electricity of Bitcoin mining.
Although a strong and data-backed argument can be made that Bitcoin mining is far less damaging to the environment and humanity than gold and the global banking system, this doesn’t mean that we shouldn’t criticize and try to improve it.
Cryptocurrency technology is in its infancy, and with any new technology, there will always be growing pains. The important thing is that we, as a community and society, learn from these growing pains, and work towards a more sustainable future for Bitcoin and other cryptocurrencies. Whether it is setting up mining rigs powered solely by renewable energy sources, or continuing to develop more energy efficient cryptocurrency projects, there are improvements that can be made and should be made. We will discuss some of these potential solutions in part 2 of this article, which will be coming your way shortly!
Where do you stand on this debate? Tweet us at @Crypto_Altruism to let us know what you think!
