365 Days of Climate Awareness 359 – Cryptocurrency and Global Warming
Blockchain was created in 2008 by Satoshi Nakamoto (a pseudonym: his identity is still unknown) as a ledger for Bitcoin, the first cryptocurrency, which was launched in 2009. Blockchain – the encrypted ledger – was created specifically to avoid double selling. money without the need for a central computer. Each transaction is added as a unit of data to the existing blockchain, making it longer and longer. To access your personal transactions, you need the encryption key. Without this key, you lose access to your segments of the blockchain, and therefore to all the currencies you own there. Suffice to say that your encryption key is absolutely essential for using cryptocurrency!
“Mining” is at the heart of the concept of cryptocurrency and the source of its impact on the climate. Crypto users use their computers (nodes) to work on the blockchain, timestamping and “validating” existing transactions. Users receive payment in cryptocurrency for transaction validations made by their computers. As the number of users has increased, the transaction validation task has become more complex and the rewards (fees) per validation have decreased.
As block validation fees have fallen, the number of users has increased, and the energy consumption of cryptocurrencies has increased dramatically around the world, exceeding the overall electricity demand of many countries. Due to the distributed and unregulated nature of cryptocurrencies, power consumption estimates vary widely. Generally speaking, there is much more uncertainty about the high side of crypto-related energy estimates. Indeed, as cryptocurrencies increase in value (the theoretical value of the currency is not the same as transaction fees), many small users with less efficient nodes start mining, using much more of energy. It should be noted that none of the recent “game-changing” US climate laws (the most recent, at the time of writing, still not passed) deal with cryptocurrencies.
Crypto CO estimates2 the shows are terrible. One study estimated 2020 Bitcoin-related emissions to be 25.2 MtCO2 (megatonnes of CO2), the equivalent of 2.6 to 2.7 billion average households worldwide. Another study estimates that cryptomining in China alone could create 143 MtCO2 emissions by 2024. The fully decentralized nature of cryptocurrencies – a deliberate feature of their design – makes it difficult to solve this power consumption problem. It also highlights the immediate need to increase our renewable energy capacity. Currently, there is no globally coordinated effort to regulate cryptocurrency, which means the problem is unlikely to change.
Tomorrow: EXXON’s climate fraud.
Be brave, be steadfast and be well.