Most money isn’t eco-friendly. Whether you’re using cash or crypto, there are environmental impacts of producing currency. Lately, Bitcoin has been making headlines for its negative impact on the environment. Bold statements like Bitcoin uses more energy than the Netherlands and Tesla stops payment by Bitcoin due to environmental impact are, rightly, raising red flags on crypto’s usage. Despite this, blockchain and crypto are being more widely used in day-to-day practical applications from education to finance, security to data management. With crypto becoming more commonplace, it’s important to understand the environmental ramifications and the most eco-friendly ways to use crypto in our daily lives.
The good news is it’s not all bad news.
Not all cryptocurrencies work in the same way, nor are they produced in the same way. Crypto like Bitcoin and Ethereum rely heavily on energy intensive mining processes. In simple terms, sophisticated computers compete against each other to solve complex computational math problems and the winner is rewarded in crypto tokens - Bitcoin, Ethereum and the like. The more complex the problem, the more computational power and energy is required to solve them. Bitcoin is by far the most mainstream cryptocurrency, resulting in booming demand and growing ‘Bitcoin farms’. This means more and more computers are competing against each other for tokens, using massive amounts of energy.
‘Couldn’t this be done with renewable energy?’ you ask? Whilst this is theoretically possible, the reality is that most crypto mining processes are powered by unsustainable energy forms like coal.
Some cryptocurrencies are greener than others - especially pre-mined crypto. And here’s why:
- All tokens are already in existence, and no energy is ever required to produce more.
- Some companies in charge of producing the tokens have pledged to achieve carbon net-zero in the next decade.
- Some pre-mined cryptocurrencies use as little as 0.0079 KWh per transaction, compared with Bitcoin at 707 KWh.
To put it into everyday terms, research from Stanford University and the University of Stockholm compared the energy output of transactions across major currency providers. The research compared the impact of 220 million transactions from Bitcoin, Ethereum, Visa and XRP. Here’s what they found...
The researchers found that annually Bitcoin consumes more energy than some countries (including Nigeria and Syria). They also found that some pre-mined cryptocurrencies are more energy efficient than Visa - a currency system designed to be eco-friendly which has been around for decades.
With all the media attention on Bitcoin and its damaging effects, it’s easy to get bogged down with thinking crypto isn’t sustainable or green. And whilst that may be true in some cases, it isn’t true across the board. There are plenty of eco-friendly alternatives out there (ADA, BITG and SLR to name a few), with the crypto we use being one of them. At VerifyEd, we want to deliver all the benefits of blockchain in a way that’s sustainable, accessible and enjoyable. To find out more about our use of the blockchain and how we keep your verified credentials secure, get in touch.