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The conversation around cryptocurrency has gotten increasingly louder, particularly in light of recent events on Wallstreet. Those who are up-to-date on current events have, at the very least, heard of Bitcoin, but they may be unfamiliar with how unsustainable virtual currencies may actually be. As a company devoted to sustainability, we believe that topic should be part of the discussion as well.
In 2008, a whitepaper titled “Bitcoin: A Peer-to-Peer Electronic Cash System” was published by Satoshi Nakamoto. It is unclear what individual (or individuals) are actually behind the currency’s creation. In it, Nakamoto argued for the use of a peer-to-peer way to send payments that would serve as a solution for double-spending, circumventing the need for third parties like financial institutions.
In 2009, it hit the market with a value of $0 and by July 2010 to $0.08 per coin. By 2013, the currency started to gain traction and has fluctuated since. Last month, it reached a record high of $40,675.80 per coin, before dropping back to $30,477 later in the month. On February 1, coins were worth $33,533.
As of January, there were 4,000 cryptocurrencies in existence. While bitcoin is a household name, many have little to no value. Others are picking up steam. Ethereum is gaining the attention of investors again after it bottomed out following the Cryptobubble burst. The currency hit a record value of $1495 on February 2nd.
You may have also heard of Dogecoin, a cryptocurrency that features a Shiba Inu mascot made popular through memes. In general, Dogecoin hasn’t been taken seriously and remains with a low valuation of $.037. However, thanks to devoted corners of the internet and promotion by thought leaders like Elon Musk, it has garnered its own share of the crypto discussion.
According to Bloomberg, while crypto is regularly grouped with energy-transition trades like Musk’s Tesla Inc., mining coins isn’t sustainable. Mining is the process of obtaining a coin by solving a complex math problem. These problems cannot be solved by hand and even very powerful computers struggle to find the solution. Speed is essential for those who hope to successfully mine the currency and those who do use computers built specifically to handle the job.
The University of Cambridge tracks the estimated annual electricity consumption for bitcoin mining, and on Feb. 1, the number was estimated at 109.29 Twh, with an upper bound consumption of 259.26 and a lower bound estimate of 38.69. For perspective, the Netherlands, with a population of 17.28 million, consumes about 108.8 TWh a year. A single transaction is equivalent to the power consumption of an average U.S. household over 23.49 days, using 685 kWh.
Bitcoin mining also results in a significant amount of electronic waste, according to Digiconimist. Powerful computers must become increasingly powerful as the blockchain expands, leading to a need for regularly upgrading elements of the machine. The old parts become obsolete. They are tossed aside, ending up in a landfill more often than not, since less than a quarter of electronic waste is recycled.
A study published in Joule in 2019 stated that during an earlier peak of the currency in Oct. 2018, would require at least 3.19 million Antminer S9 machines to achieve the necessary number of exahashes per second. The combined weight of the machines is an estimated 16,442 metric tons. This number represents the minimum, the study said, considering that at the time, the Antminer S9 had the least amount of weight per unit of computational power. The numbers will likely continue to rise as the problems become more complex.
Another study, appearing in Joule in Aug. 2020, pointed out that bitcoin isn’t the only cryptocurrency that requires substantial energy use to support the mining process. Its authors believe that bitcoin’s energy consumption only reflects 2/3rd of the overall energy consumption of cryptocurrencies. The other thousands of cryptocurrencies make up the remaining third.
While some companies are announcing more energy-efficient mining systems, others are tying the value of a currency to the environment. In December, Square announced the launch of its Bitcoin Clean Energy Investment Initiative. The company committed $10 million to support companies working on green energy technologies within the bitcoin mining sector. The initiative is a part of the company’s broader efforts to achieve net-zero carbon emissions.
The Energy Web Token, launched by the non-profit Energy Web Foundation, has gained some value among those looking to consciously invest in cryptocurrency, although shares are still under $10 at the time of this writing. The token is part of the Energy Web Chain, which the organization says is the “largest energy-sector ecosystem in the world,” with customers around the world.
Solarcoin, a blockchain-based cryptocurrency developed by the SolarCoin Foundation, links cryptocurrency to the generation of solar power. The goal is to accelerate the global energy transition by rewarding solar producers by offering a way to pay off solar installations more quickly. Companies earn free SolarCoins per each megawatt-hour produced, and just like bitcoin, the currency is accepted on purchases for goods and services.
The company behind the SolarCoin said the currency uses a “low energy proof of stake algorithm” designed to use less than 0.001 percent of the power of bitcoin when deployed on similar scales.”
As a team that loves sustainability and technology, we’d love to know what you think about the sustainability of Cryptocurrency. Please send your thoughts to firstname.lastname@example.org or tag us on social media. Did you like this blog? You may also enjoy reading this one.
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