In its early stages, cryptocurrency was seen as more of a niche concept, but it has experienced a surge in mainstream popularity as more people realize the benefits of decentralized currencies.
But these digital currencies come with real-world environmental impacts, and energy experts and nature advocates have started sounding the alarm about the damage they can cause.
What is cryptocurrency mining?
Cryptocurrency mining involves validating and adding transactions to a public ledger, or blockchain, using powerful computers that solve complex problems, which releases new cryptocurrencies into circulation. This method is called proof-of-work (PoW) because it requires machines to use a massive amount of processing power to validate the blockchain and earn rewards from the network.
As the nonprofit Earthjustice explained, it's essentially a race between "millions of computing machines" to solve the problem first, with miners using ever-faster machines and more electricity to earn rewards as the crypto's price increases.
Why does cryptocurrency mining matter?
The computers needed for crypto mining use gargantuan amounts of energy. Cryptocurrency mining can use even more energy than some countries — such as Argentina — consume in a year, Cornell professor of energy systems Fengqi You told WAER.
And while the industry has started powering mining facilities with renewable energy, the majority still rely on dirty fuels such as oil and gas, which are both major contributors to the overheating planet.
According to a report from the United Nations University, the carbon impact of Bitcoin mining from 2020 to 2021 was equivalent to burning 84 billion pounds of coal or running 190 natural gas power plants. U.N. scientists said that 45% of electricity generation for global Bitcoin mining operations came from coal, while natural gas accounted for 21% of the network's energy supply.
Meanwhile, only 2% and 5% of the electricity needed for Bitcoin mining came from solar and wind energy (though these numbers have likely increased since 2021).
"If the power source, the energy source, it's not renewable — think about coal, think about natural gas, and so on — they come with carbon footprints, they come with environment impacts, and they come with climate consequence, and that's not a good idea, right? And [as] a matter of fact, many of these activities are really powered by nonrenewable sources," You said, per WAER.
Crypto mining is also negatively impacting communities around the world. For instance, residents living near a Bitcoin mining facility in Granbury, Texas, have filed a lawsuit against the company, claiming the excessive noise has caused permanent hearing loss, insomnia, and other health problems. Residents in Memphis, Tennessee, have expressed concerns about how a newly opened crypto mining facility will impact their health and the city's water supplies, as mining also requires enormous amounts of water.
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Some cryptocurrency platforms are trying to give the industry a greener reputation. The Swiss company Fedrok is investing in carbon credits, and Lightchain AI has committed to green crypto, which it says it achieves by adopting solar and wind power and using artificial intelligence to reduce energy use.
Professor You also believes investors should be informed of the environmental impacts of purchasing cryptocurrencies.
"But I wish at some point when someone purchased a Bitcoin, they also see the carbon footprint associated with the particular Bitcoin, right, and that's possible," You said.
If you want to invest in cryptocurrencies, consider investing in more eco-friendly currencies, such as Ethereum, or clean economy stocks that benefit the planet.
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