Besides being labelled as a currency for crooks, cryptocurrency has also been blamed for being a contributor to environmental damage. A quick Google search on “cryptocurrency environmental impact” will show you a long list of articles that alleges cryptocurrency’s potential threat to the environment. 

It’s undeniable that mining Bitcoins and other cryptocurrencies use up large amounts of computer power. However, are the claims made by these justified or are they overstated? Does cryptocurrency really speed up the process of environmental damage as many of these articles claim?

How much energy does cryptocurrency mining use?

In an article published in the Guardian, it states that Bitcoin consumes more energy than countries like New Zealand and Hungary. Its CO2 emissions is also said to equal 1 million transatlantic flights. In an attempt to study the environmental impact of Bitcoin mining, other articles have also surfaced. According to The Economist, Bitcoin’s software consumes a minimum of 2.55GW, or 22 TWh in a year — a figure that’s about 4 times of Google’s energy consumption in 2015. 

Putting these figures into perspective, there’s no doubt that Bitcoin’s energy consumption has rocketed over the last few years. Due to the rise in popularity of Bitcoin, activities in mining have also soared in recent years, causing energy consumption in mining to escalate.

Other energy consumers — the bank

Comparing figures in energy consumption can give us an idea of the scale in which cryptocurrency is consuming energy. However, while it’s important to recognise cryptocurrency’s high levels of energy consumption, there’s also a need to factor in other considerations. Making comparisons between Bitcoin’s energy consumption with various nations across the globe can be misleading as it paints an incomplete picture. 

There’s no denying that Bitcoin mining uses up vast amounts of energy but that does not mean that it’s a core contributor to environmental damage. According to a report, the banking industry consumes about 100 TWh of energy annually — that’s more than 4 times the amount of energy Bitcoin mining consumes! And it’s definitely many times more than the total energy consumed by nations across the globe. 

More importantly, banks consume large amounts of fossil fuel energy, which is fast depleting. What’s more, banks are notorious for pumping billions of dollars into the extraction of fossil fuels. JP Morgan has also been called out for funding $1.9 Trillion in fossil fuels since the Paris Climate Pact. 

On the other hand, it is reported that cryptocurrency uses mostly renewable energy. In the report, it states that the Bitcoin network gets 74.1% of its electricity from green energy sources, which makes it “more renewables-driven than almost every other large-scale industry in the world.”

Can cryptocurrency really take the blame for leaving large carbon footprints?

Cryptocurrency’s environmental impact is a contentious issue, fuelled by arguments, articles and essays raised on both sides. It’s not surprising to see that articles that stand against cryptocurrency are from publications that take an anti-crypto stance. On the other hand, crypto-news websites naturally paint a completely different picture of cryptocurrency’s environmental impact.

That being said, cryptocurrency’s energy consumption is still a problem that needs to be solved. Large amounts of energy consumption is unsustainable in the long run and also extremely costly for those involved in mining as it erodes away up to 80% of their earnings. However, to claim that cryptocurrency will take the blame for environmental damages is quite an overstatement, seeing that banks play an even larger role in consuming depleting fossil fuels. Furthermore, many environmentally conscious blockchain projects are on the rise, suggesting that “environmentally-conscious” and “cryptocurrency” might just go hand in hand in the future.