It has been a turbulent year for cryptocurrency. Crypto giant FTX is just the latest in a series of bankruptcies, collapsing in spectacular fashion after a run on the company and a mad dash to recover client assets. Once worth $32 billion, it now owes up to million creditorsa fact that plunged its former CEO and its partners into crisis.
The uncertainty that plagues the crypto world is obviously devastating for investors and financial fanatics, but it might actually have a silver lining.
In order to make money from cryptography, “miners” use supercomputers to solve complex mathematical equations before their peers. If they win this algorithmic race, they can add a “block” to the network and are compensated with bitcoins. This is called the “block chain mining“, and it’s energetically expensive, time-consuming, and only occasionally rewarding.
Crypto mining was once possible with a home computer setup, but since it has been transformed into a business, it now requires massive computers with cooling systems and motherboards. It requires huge amounts of energy, usually obtained by burning fossil fuels.
According to a report from White Housecryptocurrency mining accounts for 140 million metric tons of CO2 per year released into the atmosphere, i.e. 0.3% of all global greenhouse gas emissions. This amount is higher than the emissions produced by many countries, including Argentina and the Netherlands.
The competitive nature of blockchain mining is also problematic. Barney Tan, professor of information systems and technology management at the University of New South Wales, said in a maintenance“…if 1,000 miners compete and only one wins the reward, the resources invested by the other 999 miners who lost are wasted.”
Because speed is so essential to winning the blockchain race, crypto miners use the most readily available power sources. Earthjustice reports that some are paying to revitalize dying fossil fuel power plants to get power faster.
And it’s not just greenhouse gas emissions. Computer chips used to mine cryptocurrency are made with toxic chemicals and precious metals that require literal mining to produce, ravaging Earth’s landscapes and depleting limited resources. These chips are also highly specialized and quickly become obsoleteending up in landfills as crypto mining strategies evolve.
In addition, crypto mining operations can generate air, water and noise Pollution in the communities where they are located. Local residents and businesses are forced to bear the burden while crypto companies make profits.
Benjamin Jones, an environmental economist, said in a statement published by the University of New Mexico, “We find multiple instances between 2016 and 2021 where Bitcoin is more damaging to the climate than a single Bitcoin is actually worth. In other words, Bitcoin mining, in some cases, creates climatic damage greater than one coin’s value.”
Admittedly, pre-existing currency options are not flawless. The United States alone prints billions of treasury bills each year, requiring immense amounts of water and electricity. Many of the world’s big banks are investing our money in the fossil fuel industry, contributing to the climate crisis. All money has a role to play in harming the planet, but crypto still stands out.
Compared to cash, crypto incurs three times the environmental costs, according to a Tufts study. And given that it is used far less than physical cash, crypto has the potential to devastate the planet as it continues to grow as a currency.
That’s why crashing might not be such a bad thing.
Crypto bankruptcies mean less carbon emissions produced, and as attention turns to the fragility of cryptocurrency, more can be done to address negative environmental impacts.
On November 22, amid FTX’s catastrophic collapse, New York became the first state to ban crypto mining techniques which require large amounts of energy.
The FTX crash also leaves a void in the market for more durable crypto companies. Following the publication of the White House report in September, Ethereum, the largest blockchain behind bitcoin, has risen to a higher respectful of nature mining strategy. This change could reduce its carbon emissions by 99% over the next few years.
There are also up-and-coming cryptos, like solarcorner, which rely on renewable energy to power their mining operations. In the wake of this current crypto crisis, these durable alternatives have a better chance of succeeding.
Crypto vulnerabilities were laid bare last month. While this collapse is heartbreaking for those who have invested their lives in bitcoin, it has opened their eyes to the downsides of digital currency.
Sometimes failure can be a good thing. With sustainable mining strategies, a focus on renewable energy, and increased awareness of upcoming carbon emissions, this cryptocurrency disaster could result in a win for the environment.
Earth Institute at Columbia University
This story is republished with kind permission of Earth Institute, Columbia University http://blogs.ei.columbia.edu.
Quote: Failing Crypto Could Be a Victory for the Environment (2022, Dec 21) Retrieved Dec 21, 2022 from https://phys.org/news/2022-12-crypto-environment.html
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