Cryptocurrency has become a popular investment option, but there are questions about how it could impact the environment. Cryptocurrency mining is an energy-intensive process that uses a lot of electricity, which means it’s not environmentally friendly. However, some companies have started building their Arctic data centres because of cheaper electricity prices. And the cold environment helps keep their computers cool. Learn more here for various lessons for cryptocurrency
Cryptomining also requires a lot of computer processing power, which can be problematic for both people using their own devices and businesses that make these products available for sale to consumers by often marketing them as “green” or eco-friendly. Here we will tell you whether cryptocurrency can be more environmentally friendly.
Can cryptocurrency be environmentally friendly?
Yes, cryptocurrency can be environmentally friendly. One of the reasons that people are so excited about cryptocurrency is that it’s a way to keep money off a bank’s books, which means that banks don’t have to hold as much cash in their vaults. This can reduce the amount of paper that needs to be printed and stored.
Another way cryptocurrency can be environmentally friendly is by making payments more efficient. With cryptocurrencies like Bitcoin, transactions are done over the internet, so they don’t require any physical money or checks to move between accounts. You have your digital code, and you’re good to go. That means fewer paper and ink cartridges are used during transactions, which is good for the environment.
Since cryptocurrencies are decentralised by nature, no one authority figure controls all accounts or sets interest rates or fees on users’ deposits, withdrawals. It is up to users how much they want to pay or receive for their services. This makes it easier for people who want to save money from using traditional financial institutions, which often charge high fees. It also helps them avoid being ripped off by scammers or hackers who could otherwise steal their funds.
As you may have heard, cryptocurrency mining is an energy-intensive process increasingly consuming the world’s resources. But there are ways to make this process even more environmentally friendly. Cryptocurrency mining is a threat to the environment because it requires massive amounts of electricity, and in some cases, that electricity comes from coal-fired power plants! This creates a lot of pollution and puts additional strain on our already threatened natural resources. The blockchain problem has been blamed for increasing air pollution in countries such as China and Venezuela, where cryptocurrency mining is big business.
Many crypto mining companies are building data centres in the Arctic, partly because of cheaper electricity prices. The cold environment helps keep their computers cool and decreases the cost of cooling, which is important when running a huge number of servers.
In addition to this being an environmentally friendly option for many companies, it’s worth noting that many cryptocurrency mining operations have already set up shops in Iceland and Sweden because they offer very low corporate tax rates. So there might be some benefits beyond just the environment.
Some cryptocurrencies are designed to be more environmentally friendly.
Some, like SolarCoin and CleanCoin, use solar power to mine cryptocurrency. Some others use less electricity than others. For example, Bitcoin uses an estimated 27 TWh of electricity annually, around 0.12% of the world’s total energy consumption. In contrast, Ethereum only requires about 1/200th as much energy per transaction. Its creator has a green mantra that “the Ethereum blockchain is greener than any other technology out there.
A recent report warned that bitcoin mining is “consuming more power than some countries.” Bitcoin mining is so energy intensive that it threatens to negate or reverse some of the gains made through renewable energy development.
Cryptocurrencies can also be more efficient in terms of their data storage. Suppose you compare Bitcoin and Litecoin miners who use the same computer hardware with similar specifications. In that case, it turns out that Litecoin miners will generate less heat while still producing the same amount of Bitcoins over a given period which means they’ll consume less energy overall.