Money is a very significant part of our lives. We use it to buy essentials and our wants. The way we transact money also has important implications for society and the environment. These past few years, Bitcoin has reigned in the headlines for its volatile value yet shining potential. So now, we should ask: “Is Bitcoin an environmental ally or enemy?”
As the planet continues spinning, Earth becomes more progressive. In various fields such as healthcare, business, agriculture, name it, technology paves its way even in those hard-to-reach or impossible areas.
Technology left significant marks that undeniably honed what we are today. Also, by taking a look at the present, we are living lavishly for the same reason. And if we can push for it, imagine the sustainable world future generations will live in when we used technology for the good of all.
Should Cash Still Be a Thing?
In congruence with the global efforts to mitigate climate change, a “cashless society” may have been eyed as a solution for sustainable payment transactions. This would probably be when note-making would stop as all financial transactions will work via cashless payments. But many are still opting and comfortable in transacting via conventional way (money notes, ATMs, etc.) The leading reason is that people still doubt the security of transacting online, while some are honest about having inadequate digital literacy.
Right now, you may be asking questions such as “Why is there a need to switch into a cashless society?” and “How does it affect the environment?”. Well, here’s the thing. The conventional payment transactions involving note-making and ATMs for money withdrawal activities contribute to global warming because of their energy consumption.
For example, the banknote production and recycling of coins and adding their transportation emit tons of carbon dioxide. For instance, the computed Global Warming Potential (GWP) of Dutch cash payment in 2015 equated to 17 million kg of carbon dioxide. In addition, the issue between introducing polymer notes instead of paper notes in many countries became a debate, as Evergreen Finance London warned that polymer note has higher GHG emissions than paper notes.
Aside from this, our traditional banking system helps finance the activities that contribute to environmental degradation. Banks loan their depositors’ money to fossil fuel companies and other polluting institutions.
The way we use money takes a huge toll on the environment. So a great overhaul of our financial system is necessary for a sustainable future.
Cryptocurrency: Currency of the future
Online transactions are now evidently widely used for the ease of everyone. Everything runs digitalized. Look everywhere, and you’ll witness digital technology is reigning. Many countries are slowly adapting to this change. Sweden, China, and the UK are now forging ahead towards a cashless lifestyle. Alternative options like payment cards have also become prominent. Some cashless payments are also through debit cards, credit cards, or ACG electronically through digital devices such as mobile phones, websites, kiosks, etc. The newest that came to the surface is cryptocurrency.
Cryptocurrency is the “currency of the future.” This is a digital currency that can purchase goods and services. However, it utilizes an “online ledger” with “strong cryptography” to ensure safe online transactions. It works similar to casino chips; you need to swap a real currency for the cryptocurrency to access your desired goods and services.
This currency can be a sustainable replacement for cash. Compared to the massive amount of electricity consumed by traditional banking processes (data centers, ATMs, corporate offices, production, transportation, etc.), cryptocurrencies consume less than 40%.
There are many cryptocurrencies right now. Some of the largest trading cryptocurrencies are Bitcoin, Ethereum, Tether, Binance Coin, etc. These are tracked by CoinMarketCap, a cryptocurrency data, and analytics provider.
The Birth of Bitcoin
Bitcoin, specifically, came into existence on January 3, 2009, with Satoshi Nakamoto’s white paper. It is a “decentralized currency that bypasses a central bank and can be sent from user to user on the peer-to-peer bitcoin network. “ Bitcoins come from mining, using computers to solve complex mathematical algorithms.
In the beginning, average computers solve algorithms, but as the mining becomes greater, the puzzles got harder. So miners switched to special computers equipped with massive processing power. This leads to higher volumes of electricity used. These energy-intensive processes are the root of Bitcoin’s environmental impacts.
Environmental Impacts of Bitcoin
Bitcoin packs a lot of environmental impacts in its digital processes.
Massive Energy Consumption and Carbon Footprint
Mining bitcoin, for example, becomes a trend as a preparation for the future’s currency. However, mining this cryptocurrency consumes a large amount of electricity supply. Some of this electricity comes from fossil fuels, specifically coal. Thus, adverse effect on global temperatures is expected.
According to Hindustan Times, several studies show that Bitcoin “single-handedly” worsen global warming. Bitcoin alone emits a significant amount of carbon dioxide that pushed the global temperature “above 2℃ within less than three decades.
A single Bitcoin transaction has an average carbon footprint of 549.78kg CO2-, according to Digiconomist. This transaction is equivalent to 91,624 hours of watching Youtube. In terms of electrical energy, this kind of power consumption is equal to the average power consumption of U.S. households for 39.67 days.
Hardware and Electronic Waste
Aside from the massive energy consumption and carbon emissions, the computers used for mining are energy-hungry. For example, a study from Stoll et al. points out that “first-generation miners used central processing units (CPU) in a conventional personal computer with a computing power of less than 0.01 gigahashes per second (GH/s) and an efficiency of 9,000 joules per gigahashes (J/GH)”. These CPUs are currently at a halt, and 0.1-25 GH/s and 100-45 J/GH machines conquer.
Besides the problems regarding hardware, Bitcoin also engenders electronic waste. Electronic waste or e-waste refers to any discarded electrical or electronic devices. These electronics, after serving their purpose, are also disposed of. E-waste is very threatening as it contains harmful chemicals not only to the environment but also to people. Some of these chemicals are mercury, lead, beryllium, brominated flame retardants, and cadmium. If not handled properly, they can contaminate our soil, water, and air, which are, of course, dangerous not only for humans but also for animals.
Can Bitcoin be sustainable?
In terms of sustainability, bitcoin is already sustainable, consuming less electricity than banking systems. Then while coal-generated electricity runs mining operations in China, most bitcoin miners actually run on renewable energies such as wind power and solar energy in Norway and Iceland.
Bitcoin mining is not the only industry that we should push to greener energy sources. If we push for the cryptocurrency industry and other industries to create sustainable networks that are less harmful or do not harm the environment, then we can make our world a better place.
This may sound impossible, but with the communal effort and innovations, it can possibly be done.
Aside from Bitcoin, there is also a long list of sustainable cryptocurrencies just waiting for your attention. Unlike Bitcoin that relies upon “Proof of Work,” which is highly energy extensive, these cryptocurrencies are much greener because they use “Proof of Stake” instead.
Compiled by Leigh Matthews of LeafScore, here are some sustainable cryptocurrencies that you may try.
Global, decentralized, and independent of any government, SolarCoin is just like any other cryptocurrencies. The highlighted difference is that this platform aims to actuate real-life environmental activity, specifically produce solar energy. This works by creating 1 Solarcoin for every Megawatt hour generated from solar technology.
In regards to the environmental impact of Bitcoin, BitGreen serves as an alternative. Same as previously mentioned, this cryptocurrency motivates users to do eco-friendly activities. For example, users can earn BITG by buying sustainable coffee, carpooling, and volunteering. BitGreen works sustainably as this uses a “low-energy Proof-of-Stake algorithm.” This can be used to purchase goods and services on BitGreen’s partners and be traded on ProBit Exchange, Mercatox, STEX, and Crex24 exchanges.
Developed by the co-founder of Etherium, Cadano is much more energy-efficient than Bitcoin due to its “Proof of Stake” mechanism, which saves a significant amount of energy. It was said that this cryptocurrency only consumes 6 GWh of power, claimed by its founder.
To bridge the gap between traditional financial institutions and digital currencies, Stellar networks were released. In line with its goal, Stellar doesn’t charge its users for using the platform. Also, since it can enable faster, easier, more cost-effective cross-asset and cross-border transactions, it’s even viewed as the best substitute for PayPal. You can exchange dollars, Bitcoin, Pesos, Yen, or any currency through this network, whether it is traditional or crypto.
What makes this cryptocurrency greener is its consensus protocol, in which it is open-source and depends on authentication of transactions happening through a set of reliable nodes, rather than running through the network as a “Proof of Work” or “Proof of Stake.” This process is shorter and quicker, thus making the costs and energy use at a lower range.
Known as a cryptocurrency with a significantly small carbon footprint due to its dependency on mining, Nano works by using an energy-efficient technology (block-lattice technology). Block lattice creates an account chain for each user on the network instead of a blockchain. In this platform, instead of involving the entire linear blockchain in transactions, it just consists of the sender and receiver account-chains. Thus a handful of transactions can happen within just a second.
Another cryptocurrency that operates via the “Proof of Stake” mechanism, EOSIO, utilizes pre-mined EOS tokens that can be transacted on standard cryptocurrency exchanges like Coinbase, Binance, and Kraken.
This platform’s whole process is considered energy efficient due to its peer-to-peer feature, allowing creators to disseminate applications straight to the blockchain. Like the previously mentioned cryptocurrency, Tronix (Tron currency) is also pre-mined and can be used on Binance and other exchanges.
Due to its “Proof of Capacity” mechanism, Burstcoin is one of those sustainable cryptocurrencies listed. This works by rewarding “miners” due to their usage of storage space for “mining.” For example, a 1 terabyte hard drive computer scarcely consumes more energy to mine Burst than a canning computer. This process makes it way more efficient than ASIC or GPU mining on a “Proof of Work” algorithm.
A very green cryptocurrency, DEVVIO produces significantly fewer greenhouse gases and only utilizes one millionth of the energy used by Bitcoin. This platform is made mainly to decrease energy expenses. Unlike Bitcoin that uses a “Proof of Work” blockchain, this network creates an energy-efficient system as it used individual nodes that directly talk to each other. This is web developer-friendly because web developers can immediately hook into DEVVIO’s blockchain, making it time-efficient.
A “Proof of Stake” cryptocurrency, this newly released platform (released in late 2019) does not involve mining, requiring great energy consumption. Instead, this network paves the way in creating a carbon-negative work, shedding light on the sustainable blockchain. Silvio Micali, Algorand’s founder, emphasized that Algorand is specifically developed to lessen harmful environmental impacts by making it energy efficient and address any emission gaps as its algorithm (“Proof of Stake”) makes the “electricity consumption to almost zero.”
Although these green cryptocurrencies are not as “big” as Bitcoin, these environmentally friendly alternatives may be worth a try. After all, we should not only think about the present, we should also consider our future if we wish our species to continue to thrive.
We need to change the way we live in order to pave the way for a sustainable future. This includes changing the way we transact with money. Given the harsh environmental impacts of our traditional banking system, we need a huge transformation of our financial world order.
Going zero waste involves changing the way you bank because most big banks fund the very activities that harm the environment such as fossil fuel companies.
Cryptocurrencies such as Bitcoin are dubbed as “tomorrow’s currency.” It can run more sustainably with more innovations and communal push for renewable energy sources. So even as the price runs wild in the exchanges, Bitcoin has a lot of potential as a financial model as we fight for climate change.