Is crypto bad for the environment?

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Crypto has been around for over a decade, providing people with a decentralized currency and investment opportunity. While crypto receives significant attention for its price movements, the popular asset also impacts the environment. 

Mining crypto requires energy and resources, which has raised some concerns and begs the question–is crypto bad for the environment? Let’s dive in and explore the environmental impact of cryptocurrency and some solutions.

What is crypto?

Cryptocurrencies are tradable assets that derive value from the total supply, consumer sentiment, and other factors. Some people see crypto as long-term investments, but crypto’s purpose is to provide an alternative to fiat currency.

Crypto has a strong argument for becoming a viable, mainstream currency. Some people can’t get access to a traditional bank account. You need proper documentation, and each country is different. An aspiring crypto enthusiast only needs an internet connection to start using cryptocurrencies. 

Crypto also helps advocates avoid high fees for transfers, especially when sending money overseas. You get to skip the middleman and see every transaction on the blockchain. While crypto has many benefits, 

Environmental impact of cryptocurrency

Every digital transaction uses energy. Anything from a Visa card transaction to a Bitcoin investment requires energy, but comparisons aren’t even close. 

A single Bitcoin transaction requires more energy than almost two billion Visa transactions. Each transaction uses enough power to provide electricity to homes for a few weeks. 

Even among its crypto peers, Bitcoin is an energy-consuming juggernaut, requiring more than seven times the energy than an Ethereum transaction. Throw other cryptos in the mix and minting new coins, and the environmental impact becomes even more significant. 

Bitcoin currently uses up more electricity than most countries. We would have to plant 300 million trees to offset Bitcoin’s carbon footprint.

Energy consumption of crypto mining

Crypto transactions eat up plenty of energy, but mining practices make it worse. Some Bitcoin remains locked behind complex mathematical problems on the blockchain. Miners solve these problems with advanced computing and high tech, such as application-specific integrated circuits, hoping to get some of the remaining Bitcoin unreleased to the public.

Crypto miners don’t use a personal computer to mine crypto. Miners fill entire floors and buildings with computer systems designed to solve complex mathematical problems on the blockchain. 

The reward for solving these mathematical problems diminishes every four years. Bitcoin halves blockchain values, almost like a stock split. In 2019, Bitcoin miners received 12.5 Bitcoin for solving a complex mathematical problem. The following year, the reward got cut to 6.25 Bitcoin. If we see another halving in 2024, the reward gets lowered to 3.125 Bitcoin per solved problem. 

Each Bitcoin halving delays the moment all Bitcoins are available to the public. Until we reach that point, miners will have an incentive to invest in advanced computers and technology. Solving a complex mathematical problem yields 6.5 Bitcoins, or over $260,000. Bitcoin’s value was over $40,000 as of writing this article.

Bitcoin isn’t the only cryptocurrency. These mining practices extend to Ethereum, Dogecoin, and other crypto assets. They don’t take up as much energy as Bitcoin, but miners follow the same playbook.

Why does cryptocurrency use so much energy?

Cryptocurrencies use so much energy because of competition among miners. Increased activity leads to more computing power and higher energy transmissions. Verifying transactions also requires significant energy. Between transactions and mining, crypto consumes substantial energy.  

Could crypto mining use less energy?

Bitcoin is an extreme example of crypto energy consumption, mainly because of its proof-of-work method. This approach involves complex mathematical problems to unlock the remaining coins and verify ownership. 

Minting new coins under the proof-of-stake method is a viable alternative to the energy-consuming proof-of-work concept since the verification process requires substantially less energy. Proof-of-stake coins minimize costs and energy consumption. We can also look at NFTs for signs of better energy consumption in the future. 

Minting NFTs on Flow currently requires less energy than a Google search. They use the proof-of-stake method for minting NFTs.

Cryptocurrency’s environmental impact compared to the banking system

Cryptocurrency has attracted many critics and supporters since its early days. Many critics point to crypto’s environmental impact, but few consider the banking system’s environmental impact. 

A study from Galaxy Digital Research concluded that the traditional banking system uses twice as much energy as Bitcoin. Critics have pointed out that the traditional banking system is larger than Bitcoin, making the high energy output easier to rationalize.

Are there environmentally friendly cryptocurrencies?

Most of the environmental concerns stem from Bitcoin and Ethereum. These two popular cryptocurrencies employ proof-of-work methods that require significant energy to verify each transaction. 

Proof-of-stake cryptocurrencies are practical alternatives, with some of them generating as much energy per transaction as a Google search. Cardano, Dogecoin, and XRP are three of the many proof-of-stake cryptocurrencies. Adopting proof-of-stake cryptos instead of Bitcoin and Ethereum reduces environmental impact while preserving the benefits of crypto.

Crypto’s Future Is Green

During Bitcoin’s early days, its reliance on the proof-of-work method didn’t cause much of a stir. As Bitcoin became more mainstream and miners invested in more technology, its environmental impact became significant. 

While crypto introduced many benefits, energy usage became excessive. The shift to a proof-of-stake method requires substantially less energy, putting them in line with Visa transactions. 

Ethereum plans to shift to a proof-of-stake model in the future. If Bitcoin does the same, the crypto’s carbon footprint will substantially decrease.


What is the most eco-friendly cryptocurrency?

Proof-of-stake cryptocurrencies such as Cardano are substantially more eco-friendly than proof-of-work cryptocurrencies such as Bitcoin.

Is Ethereum going green?

Yes. Ethereum is in the process of switching to a proof-of-stake model which would reduce the coin’s carbon footprint by over 99%.

Is Bitcoin eco friendly?

Bitcoin is not an eco-friendly crypto. It requires more energy than other cryptos.

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