To ethically mine crypto we need to use renewable energy

If you have access to the internet, have read a newspaper, or have even passed a television in your gym recently, you have inevitably encountered the claim that blockchain has the ability to drastically change the world.

Blockchain technology and its most popular cryptocurrency, bitcoin, have been called of equal importance to the internet, capable of transforming businesses, government, and social interaction: the entire fabric of modern society. The enthusiasm—and the hype—are both inescapable and infectious. The assumption behind the enthusiasm is that blockchain and cryptocurrencies will change the world for the better. And perhaps indeed they will; I myself am optimistic. The technology can enable democratized access to services such as medical care, financial services, and energy. As a crypto investor, this is the vision I hope to help realize.

But there is a darker side to the technology and the industry. We must recognize and address this danger soon, or else we run the risk of undoing decades of social and environmental progress. This threat is the immense energy consumption and potential climate impact of the blockchain and its two leading currencies, bitcoin and ethereum.

Cryptocurrency’s energy impact

While we have yet to see clear consensus regarding overall energy intensity, we do know that it is extraordinarily high. A recent New York Times article offers the following sobering estimate:

“The computer power needed to create a single digital token consumes at least as much electricity as the average American household burns through in two years, according to figures from Morgan Stanley and Alex de Vries, an economist who tracks energy use in the industry.”

The same article says that the computer network utilized to power the bitcoin network consumes as much energy per day as some medium-sized countries do each day. On a more granular level, Alex de Vries, an economist who tracks energy use in the industry, estimatesthat each individual bitcoin transaction “currently requires 80,000 times more electricity to process than a Visa credit card transaction.”

These are eye-popping claims. Even the founder of ethereum, Vitalik Buterin, has voiced alarm about the climate impact of the network he himself pioneered, and is working to advance less-intensive network practices. “I would personally feel very unhappy if my main contribution to the world was adding Cyprus’s worth of electricity consumption to global warming,” he said in an interview with the New York Times.

Buterin is right to be concerned: We are facing a potentially exponential global energy increase from an industry that arose less than a decade ago and is growing at light speed. Due to the design of the underlying protocol, as the industry continues to explode and more and more transactions are conducted on the blockchain, each individual transaction itself becomes increasingly energy-intensive to compute.

A bit of background may prove helpful. Bitcoin, a cryptocurrency, is a part of something called blockchain. So are other cryptocurrencies such as ethereum and litecoin. Blockchain is a list of transactions maintained by community of users, rather than a central authority, which records transactions across many computers. The process of writing new blocks in the blockchain is called “mining.” Cryptocurrency “miners” unlock new coins while simultaneously protecting against fraud by adding new block to the chain.

Bitcoin already consumes 0.15% of the world’s energy. This process makes the fundamental architecture of the ecosystem energy intensive and environmentally unsustainable. According to the bitcoin energy consumption index, the digital currency already consumes 0.15% of the world’s energy, and far exceeds the electricity consumption of Ireland or of most African nations. That is a lot of energy. While less energy-intensive changes to the underlying protocol are on the horizon, they will not occur overnight, and there is little certainty that they will be adopted.

According to the 2017 US Energy Information Association report, global energy demand is projected to grow by 28% by 2040. Adding another quarter of the world’s energy production in two decades is a daunting enough challenge as is without accounting for an entirely new, supremely energy-intensive industry. Worse, the International Energy Agency estimates that in 2017, 17% of the world’s population was still without access to electricity, and 38% were without clean cooking facilities…

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