Most people who own cryptocurrency buy it through exchanges or peer-to-peer marketplaces.
However, cryptocurrency doesn’t come out of nowhere. In reality, virtual tokens are produced mainly through mining (although there’s also staking). The mining process has a significant impact on the environment.
This article explores mining’s effects on the environment and potential solutions to solve the problem.
Environmental Impact of Cryptocurrency Mining
How does cryptocurrency work? Most people know the cryptocurrency mining process demands a substantial quantity of electricity to solve complex hash algorithms through high-powered computers or special mining rigs (ASICs).
Bitcoin mining alone consumes more energy than the entire country of Argentina: and that’s just one type of cryptocurrency while there are thousands of virtual coins and tokens.
The quantity of energy needed for crypto mining is comparable to that of small countries such as Iceland and Uruguay. However, the environmental impact goes beyond these numbers: a large portion of the energy is generated from fossil fuels, leading to a significant carbon footprint.
This leads to a negative impact on many areas of our environment. Mining can affect water quality, pollute the air, etc.
Here are some of the worst outcomes of this process:
Air pollution. Crypto mining leads to the emission of significant amounts of particulate matter (tiny pieces of solids or liquids) and other pollutants into the atmosphere, contributing to air pollution and respiratory problems for people and animals.
Mining operations also require significant amounts of electricity, which leads to higher emissions from power generation. This energy consumption leads to climate change and global warming, as we already notice.
Land usage. Mining isn’t just about separate individuals who invest in mining rigs and mine coins or tokens. Typically, mining means there are entire corporations dedicated to mining cryptocurrency.
These corporations require space, which leads to deforestation and ecosystem damage. This trend has a negative impact on biodiversity and ecosystem health, displacement of local communities, and land use conflicts.
Water quality. Virtual currency mining often leads to the worsening of water quality because the process contaminates local water sources with chemicals and heavy metals emitted in the mining process.
These toxins have the potential to contaminate local water supplies and affect aquatic, local fauna life, and human health.
The mining process raises many concerns because of these often long-lasting impacts on the environment. The changes are so drastic that many experts are afraid the repercussions could lead to changes that we won’t be able to fix.
However, many believe that it’s possible to come up with sustainable solutions. Some even consider the idea of energy-efficient mining.
Current Solutions and Efforts
The usage of renewable energy in many industries and everyday life isn’t new, so this idea transitioned to the cryptocurrency industry. Renewable energy is any source that generates power and can be renewed.
Thus, it has a lower impact on the environment or has no effects at all, which is exactly what we need in crypto mining. The current solution is to encourage crypto mining companies and individuals to switch to green mining practices.
Here are some of the most common practices:
Wind energy. Wind turbines can be used to generate power for mining operations. This alternative is an excellent choice for mining processes in locations with strong and regular winds. Typically, this practice gives the biggest amounts of power, which is great for mining.
It’s the electricity generated through moving water. Such a solution is perfect if the location where the mining occurs has rivers or dams where this energy can be generated. It could lead to eco-friendly mining since water isn’t “used” but is moved to generate power, which means it’s renewable.
Solar energy. Mining businesses can benefit from the installation of solar panels. It’s a very appealing alternative for mining companies located in sunny areas with high solar potential.
Geothermal energy. The heat of the Earth’s core generates geothermal energy, which can be used for crypto mining. Thus, any companies located near such locations can switch to this renewable power source.
There are a few other less popular yet effective practices. These solutions include using waste heat from mining operations or energy-efficient mining equipment and applying water-saving measures.
Proposed Solutions and Future Directions
Some crypto projects have also been created to be more environmentally friendly. For instance, instead of mining, users can opt for a staking process. It is based on the Proof-of-stake (PoS) algorithm, not Proof-of-Work (PoW).
The latter leads to mining, and the PoS mechanism requires staking coins to validate transactions. Thus, energy isn’t necessary. Moreover, governments worldwide offer various perks to businesses and individuals using renewable energy sources for mining.
Here are some of the practices they use:
- Renewable energy bonuses. Such bonuses as tax credits, subsidies, and grants, encourage miners to use renewable energy sources.
- Regulatory rules and laws. Governments also enact regulatory measures to encourage environmentally friendly mining activities. For example, compel mining corporations to report on their environmental impact and set emission reduction objectives.
- Campaigns to educate people and raise public awareness. Governments also fund education projects to raise awareness that educates miners and the general public about the benefits of environmentally friendly mining methods.
- Carbon taxes. To promote the reduction of greenhouse gas emissions, some governments have established carbon taxes or cap-and-trade systems.
- Initiatives and collaborations with activists. Governments can aid in forming alliances to fund renewable energy projects for mining operations or undertake efforts to encourage green mining practices.
It’s clear that mining corporations won’t voluntarily switch to sustainable mining practices unless it’s convenient for them. Thus, governments may offer bonuses to companies that try to reduce their carbon footprint.
Still, some crypto projects feel the pressure of users and change some things voluntarily. The recent example of Ethereum switching from a Proof-of-Work consensus algorithm to Proof-of-Stake proves that crypto projects can change their methods.
Conclusion
To conclude, most people understand that cryptocurrency is far from being accepted worldwide. Some of the biggest “against” points include lack of regulation and environmental impact. While regulations can change, it’s up to crypto projects to change their impact on the environment.
Today, humanity has numerous ways to reduce the usage of energy sources that can’t be renewed and switch to green energy. Crypto corporations can now switch to sustainable energy sources while the governments can incentivize them to do so.