Bitcoin and other cryptocurrencies are largely associated with the positive change & disruption they can bring to the world as we know it. Bitcoin is, however, gaining attention from climate activists for all the wrong reasons.
Climate activists including Greenpeace have launched the “Change the Code, not the Climate,” campaign that calls for Bitcoin to reduce its carbon footprint by as much as 99.9%. The campaign requires that Bitcoin adopts a less energy-consuming process to mine the cryptocurrency.
Bitcoin is Fueling Climate Change – A Software Change Could Clean it Up
If you’re wondering how a digital currency could generate enough attention to call for this change, the answer lies in the mining process of cryptocurrency and the hardware involved.
Nature of the Problem.
As the world’s most popular cryptocurrency & top 10 valued asset by market cap, the financial incentive to get into mining Bitcoin is very clear. Miners thus set up crypto mining operations working to solve the complex mathematical equations in a coding process called “proof-of-work”. The device (or system) that gets (closest to) the solution first then “wins” the opportunity to validate a blockchain transaction. While these operations range in size from a single computer to massive warehouses housing computers, one thing remains certain- they consume a lot of electricity as they work around the clock.
See here for more detailed information on mining bitcoin.
Multiple reports have a single Bitcoin transaction using between 1000 to 2000 kWh of electricity translating into a carbon footprint that is about 800,000 times the size of the footprint from a single Visa card transaction. Altogether, this comes to between 90 to 120 Terawatt hours annually and for context, this is about as much electricity as is needed to power Uganda for a year given the annual per capita consumption of 215kWh (“Energy Generated”). The cost of all this electricity is undoubtedly high and as this drives miners to look for cheaper locations or alternatives leading them back to fossil fuels.
Majors become miners.
The rising demand for crypto made the 21st Bitcoin miners turn back to the literal non-digital mines in search of coal & other fossil fuels to power their machinery as needed. The majority of Bitcoin mining is done in China with about two thirds of the power coming from coal while in the US, previously shut down coal mines have been bought & reopened to utilize this cheap power source. There’s a secondary environmental concern in areas where mining operations are set up. These operations tend to spike consumption forcing electricity regulators to opt for load-shedding and lives get interrupted.
Industry Perceptions.
Influential figures in the international crypto community including Tesla CEO, Elon Musk as well as Ripple co-founder, Chris Larsen have come out pushing for the green revolution in the mining of Bitcoin.
Musk last year expressed concerns with the rapidly increasing use of fossil fuels and retracted his decision to accept Bitcoin as a payment option for Tesla. Tesla however maintained ownership of over 40,000 Bitcoins which are currently valued at close to 2 billion US dollars.
Larsen announced a $5 million injection into the “Change the Code, not the Climate”. In the midst of backlash for attacking a concept that he has personally earned from as well as accusations that he has a hidden agenda to push his rival cryptocurrency, XRP, Larsen insists that all his efforts are for the good of the whole industry.
Is Bitcoin Good For The Environment? Chris Larsen: Full Interview
Ethereum, the second most valuable cryptocurrency after Bitcoin, is opting to switch to a less energy-intensive alternative in the form of proof-of-stake coding protocols. Proof of stake comes as a more energy efficient option as it cuts out the need for complex computations and the power to verify transactions is given to those with the most holdings of the network’s native currency.
Proof of work vs proof of stake: Understanding validation protocols as used with Ethereum
Other eco-friendly alternatives that have been floated around and adopted include moving mining operations to countries with more efficient energy production such as Norway and Iceland. It’s also pretty cool that the low temperatures in these countries reduce cooling costs.
Bitcoiners rallying against the campaign argue that while changing the software is relatively simple, it requires upgrading the entire Bitcoin network- a thought that threatens some holders of the cryptocurrency leaving them with no desire to make this