Mining cryptocurrencies requires a great deal of energy and due to its increased popularity, a study finds that it may significantly enhance greenhouse gas emissions. This increase also may derail efforts implemented by the Paris Climate Change agreement.
The study, published by Energy Research and Social Science, features commentary by John Truby, who wrote,
“Despite digital currencies providing considerable potential transactional, security, and financial access benefits, the design of bitcoin’s mining and trading system requires such a vast consumption of electricity that it is equivalent to powering Denmark. This threatens the planet to the extent that intervention is necessary to prevent similar models emerging.”
The Bitcoin Energy Consumption Index remarked that the annual electricity consumption standard is 73.12 TWh, which is about a 400 percent increase over the past 12 months. The study also found that the process of mining a single bitcoin could provide electricity for a single home for an entire month.
Based on the above information, it is necessary to find a solution. It isn’t feasible to mine in a manner that causes such an expense to the environment, the energy grid, people, and cities. Government intervention is a possible solution. According to Truby, intervention in a free market may be contentious, but it could be justified if its goal is to prevent environmental harm.
On the other hand, government intervention can be difficult due to the technology’s decentralized nature. The Paris Agreement, which is between 179 countries, can be used to determine a solution. Truby wrote,
“Furthermore, the [Paris] Agreement mentions numerous times that technology should be utilized to achieve greenhouse gas mitigation, whereas a highly polluting use of technology would very much go against the spirit of the agreement, if not the commitments made.”
Another option is to alter how bitcoin transactions are confirmed. At this point, bitcoin applies a proof-of-work system that allows rewards to miners who solve puzzles to validate a transaction, an effort which is heavily energy intensive. Alternatively, verifying and confirming digital currency transactions can be done by proof-of-stake and this protocol allows a new block’s creator, who is predetermined, to be rewarded with a transaction fee, rather than a block. This alternative option does not take up as much energy as the latter.
Truby mentioned that regardless of which route the crypto community chooses, the dialog should focus on disputing the technology, while trying to resolve the environmental issues as well. Truby wrote,
“As the underlying technology can offer significant benefits, it it is here to stay, so future models must be designed without reliance on energy consumption so disproportionate to their economic or social benefits.”