- Erin S.
Can we sustainably mine Bitcoin and CryptoCurrencies?
Bitcoin, Dogecoin, … Garlicoin… You’ve probably heard of these strangely named currencies, known as cryptocurrency. In its essence, “crypto” is digital money which can be purchased, traded, or invested in. There are many types of cryptocurrency, Bitcoin being one of the more popular options. However, this all began to change when people started taking note of the environmental impacts of cryptocurrency mining.
In order to add a bitcoin into circulation, it needs to be mined using energy-intensive server farms to solve mathematical puzzles. When paired with traditional grid power with coal or gas energy generation, the effort required to mine crypto releases significant carbon emissions. The environmental impact of this process even caused Elon Musk to temporarily suspend Tesla’s Bitcoin usage. So, how can we reduce this?
One possible method is to use renewable energy to run bitcoin mines. Although it would not necessarily cut down energy production all too much, it would significantly reduce greenhouse gas production. The biggest downside to this option is that it is uncertain by how much greenhouse gas emissions would be reduced, especially given that this method would not reduce the amount of energy required to mine. It would also increase energy pricing. It can cost anywhere from $7,000 - $11,000 USD to mine a bitcoin, depending on what machine is used to do so. This cost mainly comes from electricity which is why renewable energy could potentially be a great source of energy and could reduce costs.
Another possible alternative is to create some sort of carbon tax which could make bitcoin mining less attractive. Unfortunately, a tax on this currency could be easily avoided by miners or companies. Also, several other industries produce larger amounts of greenhouse gases than the cryptocurrency industry, so it would be odd to solely tax one industry. However, this solution could potentially cause miners to search for more eco-friendly solutions.
Overall, cryptocurrency is in demand but its shortcomings are becoming more apparent as climate change worsens. Changing any industry is not easy because it requires changing a process that was already put in place. If we want to make cryptocurrency mining more sustainable, we need to deploy renewable energy for its operations.
Sources:
https://www.forbes.com/advisor/investing/what-is-cryptocurrency/
https://www.investopedia.com/tech/how-does-bitcoin-mining-work/
https://minerdaily.com/2021/how-much-does-it-cost-to-mine-a-bitcoin-update-may-2021/