The year ahead promises to be a big one for cryptocurrency, with a number of exciting trends such as the rise of DEXs and acceptance by ETF paving the way for more transformations that are expected later in the year. Despite the hype surrounding the new era in cryptocurrency mining, the concern about the effect the industry has on the environment is increasing rapidly.
The enormous amount of electricity used during the mining of cryptocurrencies such as Bitcoin, Litecoin, and Ethereum has been the topic of countless debates over recent years. Bitcoin, in particular, has been accused of consuming as much energy during its various mining processes as countries such as Denmark, Ireland, and Serbia do.
The entire Bitcoin mining process is extremely energy-hungry by design thanks to the countless calculations required to process financial transactions without making use of any intermediaries. At present, the Bitcoin network uses in excess of 2.5 gigawatts of electricity, a figure that is bound to increase as dedicated miners becomes less commonplace, instead making way for massive networks of miners that comprises of hundreds if not thousands of machines that use unimaginable quantities of electricity.
The question on everyone’s mind now is whether it is, in actual fact, possible to mine any cryptocurrency in such a sustainable manner that ensures that the world does not lose interest in the various decentralised currencies.
How does electricity usage affect the environment?
Power companies make use of a number of different processes to generate the electricity used by households and large corporations alike. Not all of these processes were created equal in terms of environmental safety, with coal, for example, being far more problematic than solar power or wind turbines.
Most methods of electricity generation release harmful greenhouse gases such as carbon dioxide into the earth’s atmosphere. Some energy sources, however, are of far greater consequence to the environment. Nuclear power plants, for example, produce hazardous solid waste that can remain radioactive for thousands of years, resulting in genetic mutations to humans and animals as well as often irreparable damage to the environment. It is for this very reason that there is such great concern about the immense electricity usage involved in cryptocurrency mining.
Why is mining so energy- intensive?
Bitcoin, as well as most of the other cryptocurrencies, were founded on the concept of an unassailable ledger we have come to know as the blockchain. In order for any cryptocurrency to ‘exist,’ it needs to be mined. Mining occurs when computers solve highly complex algorithmic puzzles that generate new bitcoins on the bitcoin network. The bitcoin network is specifically designed to produce a steady amount of bitcoins at predetermined intervals. As more miners join the network, the algorithmic problems become harder to solve. It is at this stage of the mining process that the energy consumption issue rears its head.
Bitcoin makes use of Proof of Work (PoW) to both mine new bitcoins as well as verify various types of transactions on the network. This PoW system requires a lot of computing power to solve the problems it is presented with which, in turn, use vast amounts of electricity.
Is Bitcoin killing the earth?
When Bitcoin launched back in 2009, every block offered a 50-bitcoin reward to the miner who produced it. It has been determined that this figure will decrease by as much as 505 every year, as it shrank to 25 bitcoins in 2012 and then again to 12.5 bitcoins in 2016. By the year 2020 the reward will have been reduced all the way down to 6.25 bitcoins. As the mining revenue decreases, so too should its energy consumption. It would become a completely unprofitable and unviable activity if the consumption remained the same. Hopefully, as the reward continues to half over the coming years, the overall energy consumption of the various mining rigs should also steadily fall until it stabilizes.
While bitcoin cannot be labelled as a complete natural disaster, the environment could do with fewer side effects brought on by exorbitant energy consumption. The energy consumption can be decreased in a number of ways. Apart from the price of bitcoin decreasing, a reduction in energy consumption can also be brought on forcing the network’s block rewards to shrink at a swifter rate. Unfortunately, this is easier said than done as both bitcoin mining entities and traditionalists are already opposing such a notion.
What is the correct answer then?
The final, and probably most viable option, would be to restructure the mining process of bitcoin completely. At present, bitcoin’s intricate mining algorithm relies on the computing of a gigantic amount of cryptographic hash functions. There are alternatives, though, such as those employed by Bitcoin Gold, which is a new variation of the standard bitcoin. BG makes use of what is known as a ‘memory hard’ algorithm that has proven to be a lot less energy intensive than the regular mining rigs.
While initiating changes to existing mining algorithms may ruffle the feathers of traditionalists, it would result in significantly less energy being consumed which would, of course, be great news to the environment.
Renewable energy solutions do exist
All hope is not lost for eco-conscious cryptocurrency miners as an increasing number of mining farms are turning to renewable energy solutions to power their networks. In China, for example, hydroelectric power has firmly cemented itself as a viable energy solution for mining farms. One of the oldest mining farms in the country, BW, has made use of 100% renewable energy to power its mining rigs since 2015.
While it originated in China, hydroelectric cryptocurrency mining has successfully made its way into other parts of the world where it is being implemented to power a variety of mining rigs. In Austria, HydroMiner, harnesses the output of various hydroelectric dams situated in the Alps to run various mining operations. With proceeds received from an Initial Coin Offering (IPO), HydroMiner will look to expand its operations outside of Austria, bringing hydroelectric crypto-mining to countries such as Georgia and Canada.
Putting a positive spin on a negative consequence
Due to their immense energy consumption, cryptocurrency mining rigs more often than not produce a considerable amount of heat. The heat is, in fact, sufficient to warm a small house during the coldest of winters. Apart from a couple of Russians, Ilya Frolov and Dmitry Tolmachyov, taking advantage of this to warm their tiny home, a manufacturing concern actually went as far as to design a combination mining/heating unit that is now commercially available.
The Qarnot QC-1 crypto heater uses the excess heat that is generated by the mining process, disguising it as an aesthetically-pleasing space heater. The device mines Ethereum by default but can be configured differently to mine a number of other PoW-based currencies. By eliminating the need for separate heating implements, a household will not only save money but reduce their overall carbon footprint as well. The eco-friendly ingenuity does not end with a space heater though. In 2017 the president of the Myera Group, Bruce Hardy, started to use the heat produced by a bitcoin mining rig to run a fish farm and sustainable greenhouse in Canada.
These and other innovators are using the greatest weaknesses of crypto mining to their advantage, exploiting the original problem as the ultimate source of its own solution. While these innovations do not necessarily address the problem at its root and eliminate it, they do highlight the immense potential that exists in terms of converting something that is inherently bad for the environment, into something a lot more positive.
More green mining options
The Moonlite Project is another sustainable cryptocurrency mining space that launched in August 2018. Based in Iceland, the project operates an industrial-scale crypto-mining data center which is rated at an incredible 21 Mega-Watts. The project aims to expand its reach by constructing more mining facilities that will all utilize 100% eco-friendly and sustainable energy in all their operations. At present, Moonlite is enjoying a contractual stream of the purest energy available. Due to it being located in the cool climate of Iceland, there is also no need to make any provision for a complicated cooling system that may result in higher than needed expenditure and an inflated carbon footprint
While many green mining initiatives focus solely on a single type of cryptocurrency, The Moonlite Project currently mines Bitcoin, Dash, Bitcoin Cash, Litecoin, and Ethereum but plans to further expand their operations in the near future to incorporate an even larger variety of currencies.
Eco-friendly crypto projects to look out for in 2019
If you want to really go green with your cryptocurrency investments this year, there are a number of very eco-friendly projects such as Nagricoin to look out for. When most people think about pertinent environmental concerns, they picture issues pertaining to water and air pollution as well as global warming with very little thought being spared for the soil. The available arable land on the planet is being stretched to the max, leading to extensive nutritional depletion. In a desperate attempt to negate the damage done to the soil, farmers are turning to inorganic fertilizers that are causing even more damage to the ground.
There has, thankfully, been a distinct shift away from these fertilizers and towards a whole new generation of eco-friendly fertilizers. This is Nagricoin project from National Agricultural Technologies in Dublin is best-described as a blockchain-based solution that effortlessly combines all the advantages of a cryptocurrency with that of a tangible product. Other innovative eco-friendly cryptocurrencies to consider investing in includes SolarCoin which aims to reward investors with SolarCoin tokens for every megawatt of electricity that is successfully produced by making use of solar solutions. Alternatively, you can focus your attention on Cryptoleaf which aims to resolve a number of real-life issues identified in the natural environment by making use of complex approaches.
The importance of looking after the environment
Even after determining that the extensive electricity usage employed by cryptocurrency mining is indeed hazardous to the environment, many individuals will still wonder why they need to care about the environment in the first place. Former politician Stewart Lee Udall summed up our responsibility to protect the environment perfectly when he said: “Plans to protect air and water, wilderness and wildlife are in fact plans to protect man.”
A clean, healthy environment is essential for healthy living. Our careless energy consumption through practices such as cryptocurrency mining is putting an enormous amount of pressure on our planet. Global warming is increasing and can result in an increasing number of freak weather conditions if we do not make a concerted effort to reduce our collective carbon footprint.
Earth is our only home, for now at least, and if we don’t look after it, our grandchildren and their grandchildren will not be able to enjoy the same quality of life we have become accustomed to.
All the crypto-derived riches in the world will not be able to compensate for an earth that has been left desolate thanks to human interference.