Online consumption with online payment systems is widely accepted in today’s society. We’re spending more and more time online and with just one click we buy what we want. But how to buy everything that your heart desires if you don’t have the money yet for it? “Buy cryptocurrency!”, is what my friends promote. Millennials promote buying cryptocurrency actively. Two in five Australian Millennials jump on the crypto bandwagon, and I’m sure they’re not the only ones, since I know many friends that have bought the digital coins. Among my friends, it’s listed as the holy grail for making quick money. However, what they don’t tell us is the enormous impact on our environment. You might not have thought about the environmental impact before, especially since Elon Musk, a promoter of sustainable energy, until recently, was highly invested in Bitcoin. He promoted buying crypto money, and it was also possible to buy Tesla’s cars with the coin.
First, let’s get back to the basics of cryptocurrency. You may have heard about Bitcoin, Dogecoin, and Etherium. These are all forms of cryptocurrencies or digital currencies. Cryptocurrency works with a technology called blockchain, and is ‘mined’ by computers through the process of solving complex mathematical algorithms. Blockchain is a decentralized technology spread across many computers that manage and record transactions. You can see a blockchain as a kind of database. Which is a collection of information stored on a computer system. In most cases you still need to exchange cryptocurrency for ‘real’ currency to pay for goods and services. However, direct payment with cryptocurrency is gaining ground. Even Tesla did it a while. Most people use cryptocurrency to speculate with, and don’t use it as a payment method.
You might ask yourself why cryptocurrency was invented in the first place? Well, most currencies are regulated and controlled by central authorities. Not everyone appreciates that. In the case of cryptocurrency, it’s not controlled or regulated by any central authority. The currency is not issued by a central bank or government system. This is just one advantage of cryptocurrencies. So what else do people like about crypto money?
Personal identity: You can mostly keep your personal identity hidden, since it’s harder to link it to a personal identity. That’s why it’s so popular on the dark web.
You don’t have traditional banking fees
Easy to receive: You can receive cryptocurrency easily without the traditional systems. Through your smartphone and computer.
Online only: You don’t need to go to a physical location to withdraw money.
Advantages for international payments: Rather than the traditional payments you pay low additional currency transaction fees when going to another country when buying services and goods.
Most people buy cryptocurrency, because of the investment potential. Back in July 2010, when people started trading Bitcoin, it was worth around $0.0008 to $0.08 per coin. Now it’s worth around 45.000 dollar. At its peak Bitcoin was worth 60.000 dollar. Most people are attracted to the idea of getting rich quickly, cryptocurrency triggers our dopamine levels. Especially Millennials which are tech-savy, and achievement oriented, see crypto as their holy grail. Although a large percentage of Millennials also find sustainability important, hardly anyone talks about the impact of cryptocurrency on our planet. Not enough people are aware yet of the impact of their crypto consumption. Now that you know the basics of cryptocurrency, it’s time to dive deeper in the environmental costs of mining. Cambridge researchers say mining consumes around 121.36 terawatt-hours (TWh) a year. To compare, in 2018 the total net electricity generation in the EU was 2800 TWh. The same researchers mention that it’s unlikely that these numbers will drop, unless the value of the currency plunges. If we keep on buying, crypto money mining increases, and so will the impact on our environment. If you’ve never heard about terawatt-hours… One terawatt-hour is a unit of energy equal to outputting one trillion watts for one hour. To compare it, a classic light bulb uses between 25 and 100 watts.
Mining coins becomes more difficult with time, because computers will need more time to solve incredibly difficult mathematical algorithms. It’s only when these mathematical algorithms are solved, that a crypto coin can be mined. So eventually more energy is needed if more coins need to be mined. A solution might be a cryptocurrency that is mined sustainably. Currently, there’s no clear data on how much of the total Bitcoin network or other crypto networks are powered by renewable energy, but there’s an estimate about the carbon footprint, electrical energy used, and electronic waste.
What we found out is that there are options to mine sustainably, but most networks aren’t transparent about what energy sources they use to mine their coins. There are coins that use PoS instead of PoW, so that they are many orders of magnitude less wasteful with energy. Some examples are EOS, and ADA. We know that the impact of mining, of most cryptocurrencies, on our planet is great. We might need to rethink investing in cryptocurrency for the sake of our planet. We actively advise our cryptocurrency clients to build on a sustainable network.