How Is Cryptocurrency Bad For The Environment?

by | Jan 3, 2022 | Clean Technology, Trending

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We all know that technology has modified the way people work, interact, shop, and even pay for items. For example, businesses and consumers no longer prefer cash, and contactless payments like Apple Pay are taking their place. As a result of this technical shift, a new payment method called Cryptocurrency has emerged. But Cryptocurrency has been increasingly criticized for its environmental impact, primarily due to the energy-intensive processes involved in its production and maintenance. So, let us see how is cryptocurrency bad for the environment.

So, do you know what it is? And have you heard of Bitcoin before? Or do you have any idea how these coins are harming our environment? Continue reading if you want to find the answers to all of these questions!

What Is Cryptocurrency?

You’ve probably heard of Bitcoin or Ethereum, and you’ve also heard stories about people making quick money with these and other cryptocurrencies. Cryptocurrency is an encrypted digital currency, making it relatively difficult to counterfeit. Various cryptocurrencies are based on blockchain technology, distributed on a global ledger enforced by a network of computers. Cryptocurrencies are different from traditional currencies in that they are not issued by a central authority, which theoretically protects them against government intervention.


Cryptocurrencies are decentralized digital payment systems denominated in artificial “tokens” represented by structured ledger entries. Bitcoin was the first Cryptocurrency to be developed on the blockchain, and it continues to be a popular and most expensive cryptocurrency in the world. There are thousands of cryptocurrencies available today, each with its own set of features and needs. Litecoin, Peercoin, Namecoin, Ethereum, Cardano, and EOS are just a few of the competing cryptocurrencies that have popped out due to Bitcoin’s popularity.

What Is Crypto Mining?

Have you ever thought about where Cryptocurrency comes from? Or, what does it take to mine Bitcoin and other cryptocurrencies?

Crypto mining is obtaining Cryptocurrency through high-powered computers to solve cryptographic algorithms. The solution process includes verifying data blocks and adding transaction records to a public ledger known as a blockchain. Complex encryption techniques are utilized to safeguard this data.

Cryptocurrencies use a local distribution system and rely on cryptographic algorithms for payment verification. As a consequence, there is no single unified authority. Solving complex mathematical riddles that assist in authenticating virtual currency transactions and then updating them on the decentralized blockchain ledger is required to add new currencies to the ledger. The miners get compensated in Cryptocurrency as a result of their efforts. Mining is the process of creating new currencies.

You must have understood by now that there are numerous advantages to Cryptocurrency, but keep in mind that every coin has two sides. Yes, you figured it out. There are some disadvantages, as well.

Environmental Impact of Cryptocurrency

Let’s have a look at the reasons that show us how is cryptocurrency bad for the environment:

environment impact

1. High Energy Consumption in Cryptocurrency Mining

Mining cryptocurrencies is an energy-intensive process. It requires the use of specialized computer programs known as Application Specific Integrated Circuits (ASICs), designed to solve complex mathematical equations that validate transactions and secure the blockchain. This process demands a substantial amount of electricity.

According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin alone is responsible for 0.40 percent of global annual electricity consumption and 0.34 percent of the total electricity generated worldwide. While these percentages might seem small at first glance, the actual implications are vast:

  • Bitcoin’s annual electricity consumption is more than the energy needed to power all the tea kettles used in the United Kingdom for 29 years.
  • Bitcoin’s energy demands result in the emission of 36.95 megatons of carbon dioxide annually, which is comparable to New Zealand’s carbon footprint.

Other cryptocurrencies, such as Ethereum and Litecoin, are gaining popularity, increasing the global energy consumption rate, and it is estimated that Bitcoin alone might result in a 2-degree Celsius increase in global temperatures over the next 30 years.

2. Use of Non-Renewable Energy Sources

Many mining operations are located where electricity is cheapest, which often means areas where coal and other fossil fuels are predominant sources of energy. For instance, before crackdowns, a substantial portion of Bitcoin mining was based in China, where coal power is prevalent. The reliance on fossil fuels for mining significantly increases the carbon footprint of each cryptocurrency transaction. Although the landscape of mining locations is changing due to regulatory pressures and economic factors, the dependency on non-renewable energy sources remains a critical issue.

3. Electronic Waste

Another environmental concern is the generation of electronic waste. Mining hardware is anything but long-lasting. The need for efficiency and speed means that hardware quickly becomes obsolete, resulting in significant amounts of tech waste. These specialized machines are difficult to repurpose, and with rapid technological obsolescence, they contribute to the ever-growing problem of electronic waste, which poses severe pollution and health risks.

4. Thermal Pollution

Moreover, the energy consumed by mining rigs produces an immense amount of heat, necessitating additional cooling systems in facilities that house these servers. This not only further increases energy consumption but also contributes to thermal pollution, a lesser-discussed but equally significant environmental impact.

5. The Ripple Effect on Renewable Energy

In some regions, the intense energy demands of cryptocurrency mining compete with other needs for renewable energy resources. For example, in areas rich in hydroelectric power, the allocation of these resources to mining can mean less availability for other uses that might be more beneficial to the local community or overall sustainability goals.

Also Read: How Can Features Of Blockchain Assist Sustainability Efforts?

How Can We Decrease The Impact Of Cryptocurrency On the Environment?

Reducing the environmental impact of cryptocurrencies is critical as their popularity continues to grow. The good news is that there are a variety of solutions that can help save our planet. However, they aren’t being accepted quickly enough right now. But companies that want to keep their heads above water — and keep up with the rest of the world — must educate themselves. Here are several strategies that can help mitigate these effects:

1. Energy-Efficient Blockchains Systems

While Bitcoin, Bitcoin Cash, and Ethereum all rely on inefficient cryptographic problem-solving known as “Proof of Work” several newer blockchains use “Proof of Stake” (PoS) systems that rely on market incentives. On PoS systems, server owners are referred to as “validators,” not “miners.” They make a hefty deposit, or “stake,” of bitcoin in exchange for the privilege to add blocks to the blockchain.

In “Proof of Work” systems, miners strive to see who can fix issues the fastest in exchange for a reward, which consumes a lot of energy. However, in PoS systems, validators are picked by an algorithm that considers their “stake.” By removing the aspect of competition, energy is saved, and each computer in a PoS system can only focus on one task at a time.

2. Green Energy Blockchain Mining

Encouraging cryptocurrency miners to use renewable energy sources such as solar, wind, and hydroelectric power can drastically reduce the carbon footprint associated with mining. Several mining operations are transitioning to renewable energy, and incentives for green mining could accelerate this trend.

There are several commercial facilities for crypto mining that prioritize the use of clean, renewable energy. One notable example is Genesis Mining, which offers cloud mining services for cryptocurrencies like Bitcoin and Ethereum. Located in Iceland, a country known for its abundant renewable energy resources, Genesis Mining operates primarily using geothermal and hydroelectric power. This commitment to renewable energy has helped Genesis Mining become one of the world’s largest cryptocurrency mining companies, setting a sustainable example in the industry.

3. Government Regulations and Green Policies

Implementing government regulations that require energy reporting and sustainable practices in the crypto mining industry can drive the adoption of greener technologies. Policies that support renewable energy use and provide tax incentives for green mining practices can make a significant difference.

Cryptocurrency communities and industry leaders can play a pivotal role in promoting sustainability. Initiatives like the Crypto Climate Accord aim to decarbonize the cryptocurrency industry by committing its signatories to achieve net-zero emissions from electricity consumption by 2030.

4. Development of Energy-Efficient Hardware

Innovations in hardware used for cryptocurrency mining can increase energy efficiency. Developing more efficient ASICs and GPUs that consume less power for the same or enhanced performance will reduce the overall energy demands of mining networks.

Enhancing the overall efficiency of blockchain technology can reduce energy use. This includes optimizing software to process transactions more quickly and consume less energy.

Cryptocurrency miners and mining companies can invest in carbon offset programs to balance out their carbon emissions. This involves funding projects like reforestation or renewable energy projects that reduce carbon dioxide in the atmosphere.

Also Read: Blockchain’s Potential To Improve Environmental Sustainability

Future Plan To Make Crypto More Sustainable

As awareness grows over the amount of energy consumed in cryptocurrency mining, new attempts to improve the sector’s environmental credentials emerge on a regular basis. Increased usage of renewable energy, more energy-efficient practices, and carbon offsets are among these. TRG Datacenters predict the emergence of new, more sustainable, environmentally friendly cryptocurrencies and significant modifications in existing currencies’ practices.

According to the Business, Nano, IOTA, and Chia are pioneers in environmentally friendly Cryptocurrencies that aim to mitigate transaction-related environmental impacts. The Crypto climate agreement, which aims to decarbonize the cryptocurrency sector and achieve net-zero emissions from cryptocurrency-related electricity use by 2030, has gathered the support of more than 45 organizations and individuals from the crypto finance, banking, energy, and technology sectors.

Cryptocurrencies are a booming sector. However, as we’ve seen, most of them have a significant carbon footprint, putting them in the spotlight of European Union officials and thereby making them eager to combat climate change and reduce corporate carbon emissions. As the impact of the climate change issue continues to worsen, the trade-off between the benefits of cryptocurrencies and their environmental costs should be acknowledged.

Also Read: How Is Sustainable Technology Shaping Future Innovation?



  • Dr. Emily Greenfield

    Dr. Emily Greenfield is a highly accomplished environmentalist with over 30 years of experience in writing, reviewing, and publishing content on various environmental topics. Hailing from the United States, she has dedicated her career to raising awareness about environmental issues and promoting sustainable practices.

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