Cryptocurrencies offer a decentralized, secure, transparent banking system that is changing the very fabric of the financial world. And they are here to stay. With cryptocurrency investment growing and its use increasing around the world, it is time to take stock of the impact it has and how to mitigate the growing environmental crisis that is caused by cryptocurrency mining.
The Exponential Growth of Blockchain
NVIDIA CEO Jensen Huang: “The ability for the world to have a very low-friction, low-cost way of exchanging value is going to be here for a long time.” Most savvy investors have seen the value of cryptocurrency and, as a result, a recent study by Cambridge University found that mining is growing from strength to strength. Co-author of the study Dr. Garrick Hileman writes that, “Cryptocurrencies such as bitcoin have been seen by some as merely a passing fad or insignificant, but that view is increasingly at odds with the data we are observing.” In 2018, the combined market value of all cryptocurrencies will reach $1 trillion.
Due to its anonymity, it is difficult to gauge just how widespread use is, but by June, 2018 estimates set the number around 25 million cryptocurrency wallets in active use.
The Environmental Impact of Cryptocurrency
Mining Bitcoin alone is currently consuming 72 terawatt hours (TWh) of energy annually. In 2015, Denmark used 30.7 TWh of electricity while Ireland consumed 25.07 TWh, so bitcoin surpassed both these countries. Not only does this level of energy use have an enormous impact on the environment, it also costs mining companies a fortune.
Credit Suisse estimates that 80 percent of Bitcoin mining expenses are spent on energy alone. While Credit Suisse hopes that this expense will encourage technological developments to make mining more energy efficient, that would simply mean miners have more income to run more computers, so usage would remain the same.
Changing the Energy Game
Since energy is the largest expense, cryptocurrency mining companies flock to countries with the cheapest energy, traditionally China. A University of Cambridge study found that 58 percent of Bitcoin mining takes place in China, where a reliance on coal plants compounds the environmental impact of mining.
In an effort to mitigate the disastrous impact of cryptocurrency mining on the environment, GEAR Token is reimagining the cryptocurrency mining game. This ingenious cryptocurrency mining company has hit on a solution to decrease the total inefficient energy used for miners and also help improve its overall environmental impact. GEAR uses profits from its cryptocurrency-mining operations to build green energy farms that it then uses to run data centers. GEAR uses tidal, solar, wind, hydro and biomass energy sources to fuel its mining operations. Better still, it invests 40 percent of its revenue back into expansion of renewable energy farms which reduces reliance on fossil fuels like coal.
GEAR also invests a portion of its profits into the research and development of advanced technologies to make renewable energy more efficient, reduce the energy consumption of data centers and find alternatives for recyclables.
Powering mining operations with renewable energy is a win for the mining companies as well as the environment. This kind of closed-loop model is the type of forward-thinking development that the crypto-mining industry needs in order to stay viable.
Nikki Fotheringham is an environmental journalist and campfire cooking author. She is the editor of Greenmoxie.com where she shares green-living tips and helps people to live a more sustainable life.