According to the Bitcoin Power Consumption Index operated by the University of Cambridge’s Alternative Finance Centre, the annual energy consumption of Bitcoin mining exceeds that of Malaysia or Sweden. Activists claim that the fact that most of the mining activities take place in China, which relies heavily on coal and electricity, has exacerbated the impact.
In the past 14 months or so, Bitcoin has been on a roller coaster ride. Its price soared during the pandemic; it rose from approximately US$6,500 in March 2020 to US$64,000, and then suddenly fell in value by half.
It crashed amid China’s repression and concerns about its carbon footprint.
If the price of Bitcoin soars again, the amount of fossil fuel involved in the process will also soar.
Earlier this year, Tesla announced that it had purchased $1.5 billion (£1.1 billion) worth of Bitcoin.
Musk later confirmed that he will not sell his investment in the world’s largest cryptocurrency, but will wait until a more sustainable mining method is found.
Three environmentally friendly cryptocurrencies
Environmentalists and Musk agree that the “mining” of Bitcoin uses a staggering amount of fossil fuels.
However, there are alternative, eco-friendly cryptocurrencies that do less damage to the planet.
These may alleviate concerns about cryptocurrencies and the environment.
Smaller currencies generally seem to have a lower carbon footprint, but this may simply be due to fewer transactions. However, some digital assets are more energy efficient-which means that their impact on the environment will be reduced.
According to TRG data center research, these cryptocurrencies seem to be the most effective in terms of energy requirements:
- IOTA (0.00011kWh)
- XRP (0.0079 kWh)
- Chia (0.023kWh)
More than 45 companies and individuals in the fields of encryption, finance, energy and technology have also signed the “Encrypted Climate Agreement”, which aims to decarbonize the industry and achieve net zero electricity consumption related to cryptocurrencies by 2030 emission.