Bitcoin is definitely the cryptocurrency that has been under the most criticism lately, by some government entities and environmental aid organizations such as Greenpeace. While recognizing the potential to revolutionize the financial market, the road to sustainability is still a long way off.
Bitcoin is a historical fact that ushered in a new financial era, and Its growth is due in part to an approved consensus protocol, Proof of Work (PoW). Unfortunately, the proof of work has been protected without taking into account the environmental and social impacts it could have generated.
So, given the large amounts of electricity it consumes so far More and more “crypto miners” are trying to point to renewable energy sources to allow for more sustainable growth of Bitcoin, Like Bitcoin Valley, which was born this year in Trentino.
But is electricity the only source of environmental pollution? More and more small businesses like Bitcoin Valley are adopting sustainable solutions but in reality there are only 50 people in the world are able to change this effect.
Cryptocurrency and Sustainability: Effects of Bitcoin
The scientific world has moved in recent years by starting to analyze and compare the trend of cryptocurrencies to understand the future prospects according to their growth. Nature Climate Change states that “Bitcoin emissions alone could drive global warming above 2°C.”
The interest and concern of experts increased when the consumption of “dirty” electricity grew exponentially after the Great Migration From the “cryptocurrency miners” last year, when China was the world’s leading power in terms of mining, It changed its internal policies.
According to the study published in Joule, until last year the Bitcoin network used approximately 46% of its energy from renewable sources. But when miners moved from China to other countries such as Kazakhstan and the United States, The percentage of renewable energy for the Bitcoin network has fallen to 25.1%.
Moreover, according to the University of Cambridge, most bitcoin mining, Over 42% last year, it happened in the USa country with very weak environmental legislation, in fact the number one source of energy is fossil fuels.
Cryptocurrencies and Sustainability: How the Beneficiaries Interact
As mentioned earlier, it is the protocol approved by Bitcoin that prevents sustainable growth. In process MiningAnd The Proof of Work protocol is based on the earning system that rewards Miner faster and thus pushes him to search for economical solutions to earn more.
From the large migration map you can see how The Miners They move to countries where environmental regulation is very weak and where electricity is cheapwithout worrying about the effects it will have.
In front of this evidence, Bitcoin is not standing idly by and preparing for change. With my latest campaign Greenpeace and Environmental Working Group, Humanitarian organizations – but not only – They are paying the giant to change their code.
Greenpeace received Bitcoin donations for seven years, between 2014 and May 2021, before announcing that it would stop accepting Bitcoin donations due to environmental concerns. Around the same time, Tesla CEO Elon Musk also stopped accepting Bitcoin payments to buy Tesla cars.
Cryptocurrency and Sustainability: Bitcoin Under Pressure
Practically speaking, this may have been exactly what caused the bitcoin crash in May last year, when she declared bitcoin more acceptable. In addition to sending bitcoins on a roller coaster, Tesla also launched a chain reaction by demonstrating the severity of its environmental impact.
Bitcoin has been in a complicated situation ever since Etherem is preparing to move to a more sustainable protocol possibly in a few months, Proof of Stake (PoS). Developers have been working for years to reduce the economic impacts of moving from Proof of Work to Point of Sale.
Although there is no official information, Ethereum claims that users will soon need to validate transactions based on the number of virtual currencies they are dealing with. This way users have more chance of choosing to validate transactions on the network and earn reward.
As we have seen in this case, the result is the disappearance of “cryptocurrency miners” because the work of the miners is no longer required, in fact those who will receive the reward are defined as “certified”. So what is the next step for bitcoin in relation to the cash you receive?
Cryptocurrency and Sustainability: The Bitcoin Answer
Although pressure seems to Bitcoin is taking it slow. On the official website in the FAQ section related to Miningwe read this:
Expending energy to secure and operate the propulsion system is hardly a waste. Like any other payment system, using Bitcoin involves transaction costs.
Too bad that now you can add one block to a chain, the power consumed is equal to:
more than A million transactions will be made with a credit card.
Nowadays, miners who choose to mine according to the principles of environmental and social awareness do not receive an incentive to abandon methods that pollute the environment for more sustainable options.
Moreover, he always writes in the same Bitcoin section:
As bitcoin mining becomes too competitive and less convenient, some miners choose to stop working.
repeatedly We can prove by the massive exodus of cryptocurrency miners that this is not the case. Perhaps that’s for small miners who aren’t really generating big impacts because they don’t compete with the main impacts. MinersBitcoin exchanges and developers.
Cryptocurrency and Sustainability: Why Bitcoin Shouldn’t Ditch Proof of Work
As stated in the Greenpeace statement, Bitcoin stakeholders are not incentivized to change their protocol as it would render many existing infrastructure useless which is a constant lot of money.money invested by investors and must be recovered over time.
The transition to PoS can only be gradual, just as it did with Ethereum, and if it does happen, the fileInterested parties should give up their infrastructure in an effort to amortize the costs invested (in some cases non-recoverable) and finding new creative solutions.
Once the protocol used is 100% Proof of Stake, i Miners They won’t “need” anymore, and therefore they can’t recover the debt with the profits they can now aspire to. If we refer to the big names in the world that deal with the Bitcoin network, then we are talking about more or less than 30 people around the world.
Cryptocurrencies and Sustainability: The Action of Banks
A fact like Bitcoin, even if it has been particularly criticized in recent times, cannot go unnoticed. The value of the digital currency has grown to such an extent that it has captured the attention of many government entities and even banks.
This is a paradox because, on the one hand, there are countries like Sweden that have taken sides against bitcoin, while others like the United States welcome it with open arms. Moreover, although Cryptocurrencies are decentralized realities and do not depend on intermediaries until I found a consensus in the banks.
One of these is Morgan Stanley, the first major American bank, which It has even included bitcoins as part of its investment portfolios. This move was not of the bank’s choice, but rather a response to the pressures of its customers.
In fact, it was the same customers who requested the inclusion of the cryptocurrency.
Individuals refused to reveal their identity by sharing details of the bank’s internal transactions. Indeed, bitcoin over the past year has put Wall Street firms under pressure to consider getting involved in the emerging asset class.
Cryptocurrency and Sustainability: What Young Miners Are Doing
Small Bitcoin miners who decide to adopt sustainable options do not receive specific incentives, but they certainly do The approval of many investors interested in the environment. We have one of those behind the house which is Borgo d’Anaonia, in the province of Trento.
In this borgo there is an old woman A hydroelectric power station built in 1925 will be used as a source of renewable energy instead of fossil fuels that will power 40 supercomputers. The power and speed of supercomputers It will be covered by 100% of the energy supplied by the factory reduce pollution.
The goal of the Bitcoin Valley project is to encourage citizens and tourists, as well as new start-ups, to “revive” the village where 2,500 residents now live. With cryptocurrency, people will be able to pay at restaurants but also make a change in the ownership of their cars and take advantage of many services.
Cryptocurrency and Sustainability: Renewable Energy
If you are wondering: Why don’t all cryptocurrency miners use 100% renewable energy? This is because renewable energy production is unstable and hard to store. Some countries like Paraguay can do this because they have power supplies that depend almost 100% on hydroelectric sources.
This means that bitcoins mined in Paraguay generate less environmental impact than bitcoins mined in the United States. If bitcoin is supposed to incentivize miners who mine bitcoins in a sustainable way with a reward, they are likely to make different choices.
Copywriter, born 1992.
exit fromUniversity of TurinI am one of those naturalists and environmental biologists who is always looking for something to discover. Biologically speaking, man is a very interesting species that lives mostly near a forest made up of buildings, cafes, factories and various kinds of artifacts, solving problems related to the development of modern society: work, family, hobbies.
Specializing in risk communication, my focus is on imparting solutions on how best to improve and manage our daily lives through the selection of social inclusion, constructive and sustainable options.