Wednesday, August 10, 2022

Why Is Crypto Bad For The Environment

They Are Often Hailed As The Future Of Technology And Money But The Truth Is That Cryptocurrencies Have Devastating Impacts On The Environment

Bitcoin mining is bad for the environment | Viewer Opinion

The computing power needed to support and evolve cryptocurrency already requires as much energy as several world nations.

The ever-growing demand for Bitcoin, Ethereum, Binance Coin, Dogecoin, Cardano, Tether, XRP, Internet Computer, and other cryptocurrencies puts pressure on its creation process.

Bitcoin and other digital currencies are created through a process called “mining.”

Cryptocurrency mining is a series of complex and arbitrary mathematical equations that require vast amounts of computer processing power.

A mining operation ranges in size from a single home computer to large-scale server warehouses equipped with hundreds or even thousands of machines working 24 hours a day, 365 days per year.

Millions of computing devices work cooperatively and generate trillions of calculations to feed the cryptocurrency network.

All cryptocurrency transactions are recorded by an independent, decentralized network called “blockchain.”

A blockchain is a list of records called “blocks” that are linked together and contain cryptographic information of the previous block, a timestamp, and transaction data.

The ultimate mining goal is to solve a series of cryptographic puzzles – “hash puzzles” – and get, as a reward, a digital coin.

Depending on the cryptocurrency in question, a single coin could be worth from 3,000 to 300,000 dollars.

New Consensus Mechanisms Will Replace Proof Of Work

Bitcoin will always use Proof of Work. But other chains use either Proof of Stake or a hybrid model that merges into Proof of Stake. And staking uses much, much less energy than mining.

Staking is a consensus mechanism in which validators manage a pool of coins , the size of which determines the number of votes they get to have in the system. The validators are randomly selected to mint blocks, and all the validators vote on whether or not the blocks should be minted . Staking does not require the large amounts of computing power that Proof of Work does. Anyone can stake their coins. Anyone can be a validator, regardless of computing power.

The energy use implications of transitioning to a Proof of Stake model are massive. When Ethereum fully merges to a Proof of Stake model, it will use 99.95% less energy than it did on the Proof of Work model. The Ethereum Foundation used this chart to show how much energy their PoS model uses compared to Bitcoin:

Questions About The Environmental Impact Of Crypto

Gina Jurva Former Manager for Thought Leadership in Corporate & Government at Thomson Reuters

10 Mar 2022

Gina Jurva Former Manager for Thought Leadership in Corporate & Government at Thomson Reuters

10 Mar 2022

    Is the act of mining for cryptocurrency damaging to the environment? We asked our resident technologist to assess this emerging landscape

    Two hot words in the corporate and financial worlds today seem to be cryptocurrencies and ESG yet, are the two intertwined? More specifically, are cryptocurrencies environmentally friendly or are they a global threat to meeting climate targets as articulated at the recent United Nations Conference of the Parties ?

    We spoke to Joseph Raczynski, Thomson Reuters resident Technologist & Futurist and early adopter of cryptocurrency, about crypto-mining, the cost to the environment, and its sustainability going forward.

    Thomson Reuters Institute: In its most basic terms, what is crypto-mining?

    Joseph Raczynski: The traditional act of mining cryptocurrency is driven by heavy computer processing power as processors race to solve a mathematical problem first, so that the sole winner can add a grouping of transactions to the blockchain. For example, a transaction could be one person sending another person money via Bitcoin.

    Joseph Raczynski of Thomson Reuters

    Thomson Reuters Institute: How much does cryptocurrency cost the environment?

    Thomson Reuters Institute: Could the impact of crypto-miners be reduced in some way?

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      The Environmental Impact Of Bitcoins Hardware

      Unfortunately, its not only more mining computers that are being produced and used these days. These machines are also more energy-hungry compared to those used during Bitcoins first years.

      The study from Stoll et al. focuses on this issue, pointing out first-generation miners used central processing units in conventional personal computers with a computing power of less than 0.01 gigahashes per second and an efficiency of 9,000 joules per gigahashes .

      Nowadays, these CPUs are have been discontinued and 0.1-25 GH/s and 100-45 J/GH machines are the ones that prevail.

      Why Keep Bitcoin Price On A Leash

      Why Bitcoin Is Bad for the Environment

      More speculation and opinion on my part, but there may be reasons why those who hold powerful positions might not want to see Bitcoins price fire straight to the moon too quickly. This could be why these damaging narratives seem to surface every time Bitcoins price rises significantly, why these articles and reports seem coordinated, all coming out by multiple outlets simultaneously, and why the SEC keeps rejecting Bitcoin ETFs, keeping the price down.

      Bitcoin is Taking Market Share- Bitcoin is removing capital from traditional markets at an accelerated rate and has seen its market capitalization hit $1 trillion in a record amount of time. After Bitcoin has been declared the best performing asset class of the decade and one of the top-performing assets of all time, many investors want Bitcoin exposure.

      We are seeing an exodus of capital leaving stock markets, bond markets, precious metals, and more as investors are cashing out their other investments in droves to gain Bitcoin exposure. Many wealthy and powerful people are invested heavily in the stock markets, bond markets, metals, etc. The last thing these people want is to see money start flowing out of their preferred markets or never entering in the first place as money finds a home in Bitcoin.

      Bitcoin Reached a 1 Trillion Dollar Market Cap in Just 12 Years Image via visualcapitalist.com

      Bitcoin Growth Continues Despite the Dips Image via learn.bybit

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      Why Is Bitcoin So Bad For The Environment

      Bitcoin mining has more of an energy consumption each year than Malaysia or Sweden, according to the Bitcoin Electricity Consumption Index, run by Cambridge Universitys Centre for Alternative Finance.

      Campaigners claim that the impact is exacerbated by the fact that most of the mining takes place in China, which is heavily reliant on coal power.

      Bitcoin has been on a rollercoaster ride over the past two years or so. Its price soared during the pandemic it had gone from about $6,500 in March 2020 to as high as $67,000 in November 2021 before abruptly losing half its value.

      The bitcoin price has continued to struggle in 2022, and is currently worth around $31,000 as of May 2022.

      If the bitcoin price soars again, so too will the amount of fossil fuel involved in the process.

      In 2021, Tesla announced that it had purchased $1.5bn worth of bitcoin.

      But Tesla founder Elon Musk later added he would not be selling his investment in the worlds biggest cryptocurrency and will instead wait until a more sustainable method of mining has been found.

      Interested in other cryptocurrencies? Check out our guide to safemoon, and how to buy it.

      Which Cryptocurrency Has The Largest Carbon Footprint

      Bitcoin has the biggest carbon footprint, by far.

      The cryptocurrency behemoth is responsible for 83.72 million tonnes of CO2, which is more than two times as much as the second-worst offender, Ethereum.

      And Ethereum is at least attempting to make steps to massively reduce its 37.61 million tonne footprint, whereas Bitcoin has remained unapologetic and steadfast in its highly polluting methods.

      The third-highest polluting company is Dogecoin a funny meme which has been transformed into an entity with a bigger carbon footprint than Uruguay.

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      Why Do Esg Investors Also Own Cryptocurrency

      Theres no definitive answer as to why ESG investors own crypto. But one factor that could be at play is ESG investors arent just interested in investing with their values. They may also like the idea of exposing their portfolios to innovative asset classes that in some cases are still in development which is certainly the case with cryptocurrencies, Khentov told Money via email.

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    • Plus, not all crypto assets have the same impact on the environment. Bitcoin mining notoriously uses a lot of energy via a process called proof-of-work. But advocates of proof-of-stake an alternative process for creating new crypto tokens say it uses much less energy. Ethereum, the network that powers ether , is transitioning from proof-of-work to proof-of-stake.

      Perhaps crypto investors who care about the environment are doing their research and deciding to put money into digital assets that are more earth-friendly.

      These ESG investors are educated and intentional about their investments, putting time into making sure they align with their portfolio, Khentov says. It follows that they would apply this kind of due diligence and a wider lens to other asset classes as well, and be educated about the nuances of the technology.

      Alternative Mining Consumes Less Energy

      Why NFTs Are Bad for the Environment

      To get away from the intense electric requirements proof-of-work systems, some cryptocurrencies are turning to alternative options. The two popular choices right now are proof-of-stake and proof-of-coverage. Etherium, in particular, which currently operates on a proof-of-work model, plans to shift completely to a proof-of-stake model by 2022.

      Proof of Stake Is a Raffle System

      The proof-of-stake system flips cryptomining on its head by removing the competition entirely. Instead of competing against each other to solve a puzzle first, you invest your coins into the system to earn more coins. You still have to provide hardware, but it doesnt need to be powerful under the new system. This system focuses solely on the second half of proof-of-work miningvalidation.

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      Why Cryptocurrency Mining Requires Energy

      The energy intensity of crypto mining is a feature, not a bug. Just like mining for physical gold, mining for Bitcoin or another proof-of-work cryptocurrency is designed to use large amounts of energy. The system is designed to make it prohibitively expensive for a well-funded actor to take control of an entire crypto network.

      Cryptocurrency advocates believe that this decentralized structure has many advantages over centralized currency systems because cryptocurrency networks can operate without relying on any trusted intermediary such as a central bank. In place of any centralized authority, miners use large amounts of computational power to operate and maintain the security of a cryptocurrency network.

      Is Bitcoin Bad For The Environment Energy And Pollution Impacts

      Is bitcoin bad for the environment? Unlike most forms of currency issued by single entities , Bitcoin is based on a decentralized network. Its transactions are approved by different miners who simultaneously solve complex equations using specific hardware and plenty of energy. But how impactful is Bitcoin, really?

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      Its Used By Bad Actors

      Cryptocurrency’s association with rogue regimes from North Korea to Venezuela has plagued it even as it hurtled towards mainstream acceptance. Still, rising prices meant speculators were happy to turn a blind eye to the bad actors and keeping on HODL-ing. With crushing inevitability, Russia is now mulling accepting Bitcoin as payment for oil and gas, which is also being used by some sanctioned individuals to transfer and move their assets anonymously.

      You could argue that this is what Bitcoin is for but sanctions busting was probably not what its founding members intended. Even before the invasion, ordinary Russians embraced Bitcoin more enthusiastically than those in the West given the toxicity of the rouble, perhaps in retrospect this was a wise decision.

      Why Is Crypto Bad For The Environment

      Is Bitcoin really bad for the Environment?  Kiwi Crypto

      Crypto: so hot right now but terrible for the environment. We Skimmd how digital currencies like Bitcoin impact our earth.

      Following is a transcript of the video.

      Crypto has taken group chats and the financial world by storm. But did you know this digital currency is wreaking havoc on our environment?

      Leading cryptocurrencies like Bitcoin rely on digital mining to generate new coins and validate crypto transactions. That mining takes energy.

      A single transaction of bitcoin uses the same amount of electricity it takes to power an average American house. For one month.

      Worldwide, mining uses more power annually than some countries like Sweden or Pakistan.

      In order to generate new coins, miners use special hardware that can quickly become obsolete.

      Think: Throwing out your fancy T9 calculator after graduating from pre-calc. Every year, 30 thousand tons of electronic waste are produced as a result.

      So whats theSkimm? Crypto is on the rise, but so is its environmental impact.

      For crypto to become sustainable in the long term, the environmental concerns need to be addressed and fast.

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      Bitcoin Is Only Getting Greener

      As the world becomes increasingly more concerned about protecting the planets health, Bitcoin mining is also experiencing a push to make it as eco-friendly as possible. Recently, several privately formed initiatives have emerged in the crypto ecosystem, such as the Bitcoin Mining Council and the Crypto Climate Accord, to address rising sustainability concerns, ensuring the efficiency and transparency around crypto energy consumption. As a result, we have seen El Salvador turning to volcanoes to power Bitcoin mining while hydroelectric plants in New York are also providing greener Bitcoin mining solutions.

      As mentioned earlier, Bitcoin miners have also begun setting up on oil patches to take advantage of the wasted gas emissions from oil production, and institutions are feeling the pressure of ESG rules surrounding environmental compliant investments, further driving the push for green Bitcoin mining.

      Bitcoin Mining is Making use of Wasted Energy From Flare Gas on Both Oil and Natural Gas Drilling Sites Image via businessinsider

      Technology is also advancing, with companies like Intel and NVIDIA now making energy-efficient Bitcoin mining chips that the average person can run in their home computer using little energy consumption. As technology becomes more energy-efficient, Bitcoin mining will continue its rise in sustainability. Is it likely that someday crypto mining may become completely carbon neutral, if not carbon negative.

      Traditional Finance Uses An Unquantifiable Amount Of Energy

      Its impossible to quantify exactly how much energy goes into running TradFi. Galaxy Digital produced the chart pictured below, which is a very helpful model to start with. But, when adding in the smaller details that go into TradFi that crypto erasesprinting, writing, and mailing checks, building and operating brick-and-mortar banks, educating financial workers, and morethe bar we see on the chart could stretch into the stratosphere.

      And that chart doesnt even include the money that banks dump into fossil fuels. A study diving into the connection between big banks and the climate crisis reportedthat 60 of the biggest global banks put $3.8 trillion into fossil fuels between 2016 and today.Trillion. Thats money that could have gone to renewable resources. Thats money that could have built wind farms and solar panels. But instead it went to the pockets of fossil fuel companies. This sobering statistic makes Bitcoins energy usemuch of which is renewablelook like a spec of dust on the sidewalk compared to what big banks are doing.

      The practices of the worlds largest banks are fundamentally at odds with the 2016 Paris target of limiting global warming to 1.5 degrees celsius, wrote Jariel Arvin, reporting for Vox. This chart from the Rainforest Action Network shows how much big banks put into fossil fuels each year:

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      Whats The Environmental Impact Of Bitcoin Mining

      Higher processing power increases the likelihood of guessing the solution to the PoW, which has incentivised miners to either form mining pools, or to create mining farm facilities. In a mining pool, a collection of miners, each with their own power-intensive equipment, simultaneously attempts to solve the puzzle and then shares the profits depending on how much effort, or computing power, each miner contributed.

      A mining farm, on the other hand is a data centre that consists of hundreds, sometimes thousands, of ASIC servers that run non-stop, continually mining for Bitcoins. While the consolidation of these servers into one place encourages a reduction of energy consumption, and the specialised ASIC hardware was designed to use energy more efficiently, these mining farms still require high amounts of electricity to power them.

      In total, Bitcoin mining uses 91 TwH of electricity each year, which is about 0.5 percent of the worlds electricity consumption, more than the electricity consumed by all of Finland annually and seven times more than what Google consumes each year.

      Are Cryptocurrencies Harming The Environment

      Is Crypto’s Carbon Footprint really bad for the environment?

      Bitcoin and other cryptocurrencies have been slated as the future of finance. However, are cryptocurrencies harming the environment? More light is being shed on their environmental impact as studies determine that each Bitcoin transaction consumes large amounts of electricity, a problematic finding as the world looks to make the shift towards green energy.

      Since its first transaction in 2009, Bitcoin has soared in popularity and has been volatile at times. At the time of writing, a single Bitcoin costs USD 57 000. However, more concerning than its volatility is its energy consumption.

      How Does Bitcoin Work?

      Bitcoin is regulated through a blockchain in which each transaction is tracked through a public ledger ranging across computers worldwide. This mining process, which allows validated transactions to take place, is extremely energy-intensive a single Bitcoin transaction could power the average US household for a month, with the Bitcoin network able to process about seven transactions per second.

      Computers used to mine Bitcoin need to be high-powered enough to solve complex computational math problems, too complex to be solved by hand. The amount of Bitcoin released is halved every four years or so, making the currency more scarce and valuable over time but also more costly and time-consuming for miners to produce, affecting its energy consumption rates further.

      Is Bitcoin Bad For the Environment?

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