Cryptocurrencies, and specifically Bitcoin, are regarded as solid investment assets, maybe some of the best in the past decade. They are slowly penetrating almost every industry, including finances, pharmacy, supply chain, and many more.
There are various financial products that have been made possible with blockchain and Bitcoin, such as options trading on Bitlevex, the entire DeFi ecosystem, and the NFT market.
However, all of these advancements have also been criticized for their impact on the environment. Bitcoin mining is notoriously seen as a huge contributor to pollution, having a carbon footprint larger than a small country.
Crypto enthusiasts consider this as a necessary evil to be able to decentralize our monetary system. Others, wish that Bitcoin mining could shift towards greener energy and will not consider it as a payment method until then.
Is crypto mining really that bad for the environment?
First, we need to assess whether Bitcoin mining is really bad for the environment. The latest study from Cambridge University shows that Bitcoin consumes more than the entire country of Argentina on a yearly basis.
This is certainly a worrying statistic, as the BTC network is used to serve only a small amount of transactions, in comparison to traditional monetary networks like banks or Visa.
As a result, the narrative that the spending of this energy is for the greater good falls a bit flat. It has made companies like Tesla backtrack on their decision to accept Bitcoins as a method of payment, or at least until 50% of its mining is directly coming from renewable forms of energy.
This decision alone is regarded as one of the main reasons for the crypto market crash of May 2021, where bitcoin dropped 50% from its all-time high in just a couple of weeks.
What can be done to make Bitcoin Greener?
On the other hand, Jack Dorsey, CEO of Square and Twitter, sees this renewed public interest in Bitcoin mining as a good thing. He believes that Bitcoin isn’t going anywhere and that it will, in fact, encourage energy producers to start providing more sources of renewable electricity.
In their recently released paper, Square shows how Bitcoin, as a huge electricity consumer can persuade providers to switch to cleaner sources such as wind, solar or hydro.
Indirectly, we’ve already seen an impact on dirty miners in China. This country, where more than 60% of all Bitcoin miners are situated is usually regarded as a producer of dirty power, relying on outdated coal plants.
However, in recent years, the government has been closing down these high-polluting plants and investing considerable funds into renewables. Just recently, the Chinese crackdown on miners only concerned those mining farms that were heavy users of coal-based electricity.
Additionally, interest in Bitcoin mining in environmentally-friendly countries like the US and Australia has been increasing. In April, Mawson Infrastructure Group ordered 11.760 mining rigs to be distributed in their facilities in the US and Australia.
Not only will this huge investment shift the narrative toward cleaner bitcoin mining, but it could also play a role in decentralizing the mining power from China to the rest of the world.
It’s no secret that Bitcoin mining is a power hog and that something needs to be done about it. While a shift to a more sustainable consensus model is considered to be unattainable, mending the source of the problem could actually benefit not only Bitcoin but all of humanity.
Bitcoin could ultimately encourage energy producers to provide an increasing number of renewable energy sources. This would add another entry to the huge number of benefits that the original cryptocurrency has brought us over the years.