By Ashley Kang
In 2009, a new mode of financial transactions came into the hands of consumers worldwide through the creation of Bitcoin, the first cryptocurrency. Bitcoin is a digital payment currency that utilizes cryptocurrency and peer-to-peer technology to create and manage monetary transactions without the intervention of banks and outside the scrutiny of government entities. Individuals can get bitcoins in several ways including purchasing them with ‘real’ money, accepting payment in bitcoins, and participating in bitcoin mining. While most people are aware of about Bitcoin’s significant presence and success in the financial market, many are unaware of the impact bitcoin mining has on the environment.
Bitcoin mining is performed by high-powered computers solving complex computational math problems. When a computer solves a puzzle, it then stores that information in a blockchain. A blockchain is a database storing bitcoin transaction records that is distributed across peer-to-peer network. When bitcoin miners add a new block of transactions to the blockchain, they are awarded bitcoin. As simple as that sounds, bitcoin is only awarded to the miners that solve the puzzles first. The competition surrounding bitcoin mining led to individuals seeking out more powerful computers, faster internet connection, and cheaper infrastructural services, especially electricity, to maximize the possibility of profiting from bitcoin mining.
Unfortunately, there is a darker side to that modern treasure hunt for riches. Computers must be run continuously and as a result, create significant demands on the energy sector. A typical server consumes approximately 1.5 kilowatts of energy. Multiply that by the hundreds of thousands of machines engaged in Bitcoin mining, and the environmental impact is significant. Bitcoin miners have also started to locate their computational mining equipment in geographical locations that have less restrictive environmental regulations and that offer cheap energy in order to enhance their profits. As a result, cryptocurrency mining has relied on both dirty energy sources, such as coal, as well as renewable energy. Depending on the energy source, researchers estimate that crypto mining can produce up to 15 million tons of global carbon emissions annually. Yet, local and federal governments have not created regulatory oversight mechanisms to address these new environmental issues caused by crypto mining. Undoubtedly, as new kinds of cryptocurrencies emerge and gain popularity, new regulations directing actions of bitcoin miners will have to be considered in the near future.