Unless you invest directly into projects or systems that focus on carbon reduction, it is most likely that every transaction you make, you will increase your carbon footprint. For example, buying something from an online store (i.e. www.earstretchershop.com) and the following sequence of events required to ensure it is delivered to you.
A domino effect is created every time you spend money with carbon emissions connected.
This is true for the £, $ & € but what about cryptocurrencies?
The biggest bitcoin miners in the world have a huge environmental impact due to energy consumption. bitcoin mining currently equates to 0.21% of the world’s electricity consumption. (Figures at time of publication show that Bitcoin’s yearly energy consumption 45.93 TWh per Year, for perspective Hong Kong’s consumption is 44 TWh per year & Peru’s 42.9 TWh per year.
Bitcoin’s biggest problem is not even its massive energy consumption, but that the network is mostly fuelled by coal-fired power plants based in China. Coal-based electricity is available at very low rates in China and this results in an extreme carbon footprint for each unique Bitcoin transaction.
At the time of writing, 16.73 U.S. households can be powered for 1 day by the electricity consumed for a single bitcoin transaction.
The carbon footprint of a bitcoin transaction is 242.53kg of CO2 or the equivalent of 594 miles driven by an average passenger vehicle. The carbon generated by one Bitcoin transaction can be sequestered by 6.3 tree seedlings grown for 10 years.
Currently, the number of global non-cash payments exceeds 500 billion per year or 1.37 billion per day. Bitcoin handles around 400,000 transactions on a good day, (currently 230,000 - https://blockchain.info/charts) meaning that the current global payment system handles 3,400 times more digital transactions per day than Bitcoin does! Even on this flawed comparison, an average non-cash transaction requires 1,200 times less energy than a Bitcoin transaction.
The alternative is to view Bitcoin as a ‘digital gold’ on the surface this comparison is quite far-fetched, as gold doesn’t have an inherent transaction limit, surging fees, or the possibility to duplicate the entire supply at will (looking at you Bitcoin Cash or Bitcoin Gold et al.) It also doesn’t make Bitcoin’s sustainability problem go away either, as even gold mining is less energy-intensive than Bitcoin mining.
With such a negative impact, it is only natural cryptocurrencies are looking to move away from an environmentally challenging proof of work consensus algorithm. More energy efficient algorithms, for example, proof-of-stake, have been developed in more recent years. In proof-of-stake coin owners create blocks rather than miners, therefore not requiring power hungry mining machines that produce as many hashes per second as possible. As a result, the energy consumption of proof-of-stake is negligible when compared to proof-of-work.
It is plausible for Bitcoin to switch to such a consensus algorithm, which of course would significantly improve sustainability. The only issue currently is there are many different versions of proof-of-stake, and ultimately none of these have fully proven themselves yet.
Nice post
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit
Thank you for your support!
Downvoting a post can decrease pending rewards and make it less visible. Common reasons:
Submit