Is Cryptocurrency Killing the Climate?

This Week’s Reason for Hope

U.S. military releases its first climate strategy

Calls for

• Cutting emissions 50% by 2030 and reaching net zero by 2050
• Development of all-electric, non-tactical vehicle fleet by 2035
• 100% carbon-free electricity for Army installations’ needs by 2030
• Buying construction materials w/ lower embodied carbon emissions

Carbon footprint of U.S. military is larger than Sweden, Peru or Hungary

Sources

https://www.reuters.com/markets/commodities/us-armys-first-climate-strategy-calls-emissions-cuts-base-protections-2022-02-08/

Chart: The U.S. Military Emits More CO2 Than Many Nations | Statista

Cryptocurrency and its Carbon Footprint

Basic data

As of November 2021

• Over 10,000 different cryptocurrencies
• Crypto asset market surpassed $3 trillion globally

Largest cryptocurrencies

• 1st - Bitcoin
• 2nd - Ethereum

Electricity consumption

• Bitcoin’s is greater than Google, Apple, Facebook and Microsoft combined
• Bitcoin and Ethereum together use the about the same electricity as the U.K.
• China recently banned Bitcoin mining because of its emissions

Cryptocurrency produces between 8000 - 12000 tons of electronic waste each year

As of this week, one Bitcoin transaction is equivalent in energy use to 2.3 million Visa transactions

Average transaction size as of November 2021

• Bitcoin - $16,000 USD
• Visa - ~ $50 USD

Proposed Solutions

Utilize flared natural gas

Quote from Guardian article

“It’s like if you had a leaky gasoline pipeline and, instead of fixing the problem, you plugged in a Humvee next to the leak and left the engine on in perpetuity with the A/C on full blast,” Mahdavi said.

Transition to renewable energy

Square payment platform

• Deals in crypto transactions and holds 5% of cash reserves in Bitcoin
• Founder, Jack Dorsey, has committed company to be net zero by 2030
• Sees renewable energy as solution

Reduce energy intensity of validation process

Shift away from proof of work model

• Proof of stake model requires a fraction of energy
• Ethereum is planning to move to proof of stake model in 2022 and says it will cut its energy use 99.95%
• Cardano, another cryptocurrency, was built on a proof of stake validation 

Government regulation

EU called for ban on proof of work validation given its energy intensity

In U.S., Senator Elizabeth Warren has been holding hearings on energy consumption of some of cryptocurrency miners 

Sources

Crypto Woes: Cryptocurrency and Climate Change, from Coal to E-Waste | Environmental Center | University of Colorado Boulder

Bitcoin’s Impacts on Climate and the Environment (columbia.edu)

Bitcoin's Climate Change Impact Is Under Scrutiny - The New York Times (nytimes.com)

A ‘false solution’? How crypto mining became the oil industry’s new hope | Cryptocurrencies | The Guardian

Cryptocurrency finds itself in the sights of robust regulation | Reuters

Warren Targets 6 More Crypto Miners for Their Energy Use (yahoo.com)

What are NFTs and why are some worth millions? - BBC News

Cambridge Bitcoin Electricity Consumption Index (CBECI)

Bitcoin Energy Consumption Index - Digiconomist

How Cryptocurrency Works | NYT - YouTube