Cryptocurrency Seems So Anti-Green – How Do We Fix It?br>
Cryptocurrencies and environmental sustainability do not go hand in hand, a fact brought sharply into focus by the news that the nation of Iceland is using more electricity mining bitcoin than powering its homes. There is no getting around the fact that bitcoin, ethereum and the myriad of minable altcoins are responsible for a large uptick in power consumption from energy guzzling datacentres packed full of GPUs.
For the uninitiated, bitcoins are produced through a “mining” process, where devices expend computing power to solve difficult math problems which verify recent blocks of crypto coin transactions. The miner (or more commonly mining consortium) that solves the problem adds the block to the blockchain and receives a shiny new cryptocurrency coin for their trouble. As the crypto community has expanded and more miners have joined, the complexity of the equations has increased in tandem with the increase in energy consumption.
To put the problem into perspective, The bitcoin network alone consumes about 71 TWh of electricity per year, and the ethereum network about 20.5 TWh, meaning that together, they account for energy consumption on a par with the United Arab Emirates (~96 TWh per year). Economist Alex de Vries predicts currency mining could consume 0.5% of the world’s energy by 2018, a truly staggering figure, which has put crypto currencies – and bitcoin in particular – in the firing line of multiple environmental groups.
This wouldn’t be a problem in a system where all bitcoin mining was being powered by renewable energy (Iceland is powered by geothermal energy for example). However, with an estimated 60% of the mining hash power originating from China, and 70% of the electricity in China being generated by non-renewable sources such as coal, it shows that the Iceland example of sustainable crypto mining is the exception rather than the rule.
This isn’t to say that regular fiat currencies aren’t also responsible for environmental damage (physical mining of metals for small coins springs to mind). It’s unlikely that big banks will be able to wean themselves off the massive energy consumption required to keep every headquarters, branch and ATM going any time in the near future. Given the crypto community’s often touted position as being the future of money, it needs to do better than resorting to petty whataboutism. How do we rehabilitate crypto and blockchain to be greener?
There are already companies trying to lessen or offset the environmental impact of crypto mining. Recently, William Shatner threw his sizable weight behind Solar Alliance, a Canadian company building a three-megawatt solar farm that can be rented out to cryptocurrency miners.
Less immediately obvious are the many blockchain companies that are indirectly offsetting the environmental impact of rampant mining. Blockchain-based app Foodtrax enables consumers to follow products from source to store shelf, allowing for easy monitoring of suitable practices. Beijing-based Energy Blockchain Labs is creating transparency in Chinese carbon trading markets, with a view to make them more accessible to small scale traders.
This is where blockchain’s penchant for decentralization intersects wonderfully with energy saving practices. Enabling smaller companies to enter monopolized markets threatens to erode the power of big energy companies, benefiting consumers worldwide. Various initiatives, EnergiToken included, are using a peer-to-peer exchange model to trade renewable energy, circumventing the need to buy energy from existing suppliers. By motivating small renewable energy producers to earn credits from any excess power they produce, there is an opportunity to reduce the need for centralized power grids, making the existing energy ecosystem more efficient. This is an opportunity that would not be possible without blockchain technology.
Just as interesting as the initiatives to transform the energy market, are the examples of crypto powered endeavors addressing the wider issue of environmental unsustainability. For example, a blockchain powered initiative called the Plastic Bank is issuing tokens earned from collecting plastic waste to help impoverished communities, these tokens could then be convertible into cash, exchanged for cooking fuel or education vouchers, among other things.
Energi Mine is using a similar system, providing the crypto currency EnergiTokens (ETK) to consumers when they engage in energy saving behaviors such as using public transport, purchasing energy efficient appliances to reducing energy consumption. The ultimate goal of this is to reduce global energy demand and carbon emissions by creating a system of financial incentives which will subtlety shift positive energy decisions to become unconscious reflexes.
In this way, Energi Mine and others are taking a holistic approach to tackling the so-called “rebound effect” of environmental benefits being cancelled out by changes in behavior. This is something which happens often without people realizing, for instance, when you cut your electricity bills through efficiency, you then turn up the air conditioning more often. Crypto miners are especially guilty of this. Every advancement in processor efficiency or cooling in negated by the gradual upward creep in power usage.
Whether it is making sure that the energy for crypto mining is coming from renewable sources, or simply investing in the green-minded initiatives that the crypto and blockchain community have created, everyone in the crypto community can do something to reduce or offset its environmental impact. If crypto is truly the future, then we can do better than this, and afford to do more to change the world for the better not just financially but environmentally as well.