When you think of cryptocurrency, you might think of computers, online transactions, decentralized organizations, or non-fungible tokens. However, one topic that isn’t often discussed is the environmental impact of cryptocurrency. Mining cryptocurrency is the process of creating new digital currency. Individuals mine cryptocurrency by utilizing their own hardware to solve complex computational puzzles in exchange for these “coins.” Mining crypto requires large amounts of electricity. According to a Climate and Energy press release by the White House, crypto-assets can have significant environmental impacts for these reasons:
“Global electricity generation for the crypto-assets with the largest market capitalizations resulted in a combined 140 ± 30 million metric tons of carbon dioxide per year (Mt CO2/y), or about 0.3% of global annual greenhouse gas emissions.”
Although crypto’s production of CO2 is a clear issue, a recent event in the cryptocurrency market has affected its environmental impact in a positive way. On Sep. 15, the second-largest cryptocurrency, by market capitalization, saw a major update termed “the merge.” In the merge, Ethereum transitioned from a proof-of-work to a proof-of-stake structure. The main environmental impact of this transition is that transactions will no longer be validated through mining, which eliminates the need for these large mining facilities. As a result, Ethereum’s energy usage will see a 99.95% reduction.
An anonymous college student who runs his own non-fungible token project on the Ethereum blockchain was gracious enough to share his perspective. The project he is running is themed around the notion that, in the future, people must leave the planet due to environmental and social issues. In keeping with the theme, he says that a percentage of the project’s profits will be allocated to combating climate change. Additionally, he stated his opinion on “the merge” prior to the event:
“I believe that the merge will cause an initial hit to the value of Ethereum but, ultimately, will be beneficial. The environmental impact is a huge benefit and will allow for the currency to evolve in the future.”
It is interesting to understand how cryptocurrency plays a role in the real world. Ultimately, this “merge” seems like a beneficial event and evidently, if other currencies follow Ethereum’s lead, the environmental impact from this sector will see an even larger reduction.
~ Ryan Mark `25