Cryptocurrencies have increasingly attracted criticism over their significant environmental impacts. The main concern pertains to crypto mining, which many studies have established consumes more energy annually than Belgium or Chile. Environmentalists are concerned because most of the power in crypto mining comes from fossil fuels, contributing to a higher carbon footprint. Is now the time for bitcoin trading to go green?
Although cryptocurrencies’ environmental impact is an industry-wide issue, Bitcoin shoulders most of the blame. Perhaps, that’s because it’s the most prominent crypto by market cap and the most popular virtual currency. Many people think about it whenever others mention cryptocurrencies. Such claims have slowed Bitcoin’s mass adoption, with some companies even halting accepting crypto payments.
How Bitcoin is Addressing the Industry’s Environmental Impacts
Meanwhile, several Bitcoin mining companies have already begun shifting to clean energy sources such as solar, wind, and nuclear to reduce the industry’s carbon footprint. New and existing blockchain projects are increasingly exploring various ways to migrate to less-energy-intensive systems and extract renewable energy for their operations.
Organizations like the Crypto Climate Accord want to ensure that all blockchains use renewable energy by 2025. The organization has produced an audit document to tally the crypto industry’s environmental impact. The Bitcoin Mining Council recently surveyed 32% of its network and established its miners used a 67% renewable energy mix.
Those are significant steps towards making Bitcoin and the entire crypto industry green.
Nevertheless, it is worth noting that a cryptocurrency’s environmental impact and sustainability depend on several factors. Energy consumption is just one of the commonly cited. Still, consider the combination of energy sources and even the number of mining operations powered by renewable energy.
Renewable and Sustainable Power for Bitcoin Mining
Some mining companies like Equinor and Crusoe Energy have repurposed traditional power plants or excess gas from drilling that usually goes to waste during mining operations. Experts suggest spinning energy reserves to harvest and store the electricity that goes to waste to promote zero carbon emission mining. However, critics have raised concerns that the approach does not eliminate harmful emissions but transfers them to another industry.
Several crypto mining entities have also made significant attempts to use solar and wind farms to move their activities away from non-renewable energy sources. A Houston-based tech company, Lancium, is an excellent example. The firm has announced plans to invest $150 million into renewable crypto mining plants in 2022.
Studies have also proven transitioning from Proof of Work to Proof of Stake systems could reduce cryptocurrencies’ overall energy consumption by almost 99%. Unlike PoW systems, PoS systems select validators based on how many of the project’s native tokens they have, as stated in their smart contracts. Miners with more coins usually have a greater chance of being selected to verify and validate transactions on the blockchain.
Like crypto mining, the selected validators receive a stipulated amount of newly minted tokens as rewards for their participation. However, PoS has lower hardware requirements than typical crypto mining, allowing many people to become validators. That boosts the project’s decentralization and network security. Besides, using PoS systems will also significantly reduce the energy needed to power the network. Ethereum is one of the cryptocurrencies that has transitioned from PoW to PoS systems.
Environmental concerns have dodged Bitcoin for many years, and there is no indication the criticisms will stop soon. Several Bitcoin mining companies and other industry players are making tremendous efforts to green Bitcoin and the entire crypto industry. However, it will take time to accomplish.