Climate change is rapidly affecting public health, especially in places that already experience extreme weather or have poor access to healthcare. The switch to renewable energy sources is inevitable if we want to save our planet, but where does that leave digital currency like Bitcoin?
What Bitcoin’s Defenders Say (and Why it’s Important)
The question of how to responsibly use Bitcoin goes beyond using credit cards to fund crypto purchases; it involves how we use the currency itself. We used to think that fossil fuels only impacted the earth if there was a spill. In reality, our daily use of fossil fuels is what’s killing us.
While there’s plenty of evidence to back this up, it falls on deaf ears. To examine whether or not Bitcoin can be environmentally friendly, we need to tackle common arguments appropriately.
“If Bitcoin is used by more people, it has the potential to reduce energy consumption.”
- It’s unlikely Bitcoin will replace the banking industry. Bitcoin’s value isn’t tied to anything, whereas governments have an invested interest in keeping the currency stable.
- Bitcoin uses a proof-of-work model to validate transactions and keep them safe and secure. This process is still really wasteful, even when miners switch to proof-of-stake.
“Bitcoin is aiming to switch to renewable energy sources (and moving away from coal).”
- While this is positive, renewable energy isn’t made out of thin air. It’s collected and stored. If crypto miners use this energy, they’re taking it from another industry.
- Since Bitcoin mining requires special hardware, it can’t be repurposed. Not only does this cost a lot, but it also produces more waste that has nothing to do with energy.
“The rapid adoption of Bitcoin could incentivize increased renewable consumption.”
- Any reason to switch to renewable energy is typically good. However, Bitcoin miners need a constant supply of power, and they still produce electrical waste either way.
“Even if Bitcoin isn’t environmentally friendly, there are other cryptocurrencies that are.”
- This is true. Chia, IOTA, Cardano, Nano, and Solarcoin are more environmentally friendly than Bitcoin. However, “less damage” doesn’t equate to being eco-friendly.
- We would also have to assume that people will pull their money out of Bitcoin and switch to another currency, that Bitcoin will go green, or that Bitcoin will only allow miners to use renewable energy while mining. There’s a slim chance that this will happen.
Unfortunately, it’s difficult to ask people to stop using something that affects our environment when money is involved, so our best-case scenario is switching to a greener cryptocurrency.
How Cryptocurrency Could Become Environmentally Friendly
Based on our research, the process of creating an environmentally friendly blockchain and cryptocurrency isn’t possible, but that doesn’t mean that won’t be the case in the future.
If cryptocurrency wants to eliminate its environmental impact, it has to:
- Be backed by something that can be tracked or;
- Be taken seriously by governments.
- Switch to something better than a proof-of-stake model.
- Convince countries to only use renewable resources.
- Use electrical technology that can be reused multiple times.
- Save enough energy for other industries.
- Convince others to switch to more environmentally friendly coins.
These standards seem high, but the blockchain won’t be able to offer banking services to the 2 billion people around the world who desperately need it in its current state. We have to consider if we can afford the extra environmental cost while we’re in the midst of a climate catastrophe.
Visa and Mastercard consume 91.8 kWh and 70 kWh per 100,000 transactions, respectively, which is much higher than IOTA, which consumes 11 kWh per 100,000 transactions. It’s clear to see that the potential is there, but it will be a while before a total environmental shift is made.