As cryptocurrency attracts more attention, the environmental impacts of the underlying technology around some of these currencies are rightly causing concern. The climate crisis demands that every industry reduce energy consumption and carbon pollution as much as possible and as quickly as possible. The energy demand of cryptocurrency, especially cryptocurrency created through the “proof of work” method, threatens our path to decarbonization and zero emissions.
How is cryptocurrency created?
- New digital coins are generated or “mined” through a network of computers that create a secure monetary system without a centralized authority regulating it. Cryptocurrencies are created by verifying transactions between users using blockchain technology.
- The most common process is known as “proof of work”. The popular bitcoin cryptocurrency is an example of a currency that relies on the proof-of-work validation method.
- Proof of work sets up a global competition between massive computer networks to first solve a mathematical puzzle; the winner receives a newly minted coin as payment, and the global system obtains validation of recent transactions. The difficulty of the puzzle increases over time and as more computing power is devoted to the problem.
- Proof of work is not the only way to validate cryptocurrencies. Other methods, such as proof-of-stake methodology, use over 99% less energy than proof-of-work mining by randomly picking a winner from those with coins, proportional to the amount they contribute temporarily or “participate”.
- Other less power-consuming methods include proof-of-authority, open representative voting, federated consensus, proof-of-activity, and proof-of-burn.
In a nutshell, the proof-of-work system trades computing power – energy – for a new currency. Other methods require less power consumption.
What is the impact ?
- Following China’s ban on cryptocurrency mining in 2021, the United States is now home to the largest cryptocurrency mining operations in the world.
- Miners capture fossil fuel power plants in New York, Pennsylvania and Montana.
- Mining operates 24 hours a day, 365 days a year, emitting millions of tons of greenhouse gases that otherwise would not have been emitted.
Current estimates place bitcoin alone’s electricity demand on par with countries like the Netherlands.
Coal-fired power plants that were running very little or were scheduled to shut down are now being revived and operated solely to power massive proof-of-work mining operations. Gas-fired power stations are also dedicated to this purpose at a time when the transition from coal and gas to renewable energy is essential to avoid the worst of the climate crisis.
What does Earthjustice do?
- Earthjustice is challenging permits for one of the first power plants captured by encryption, the Greenidge Power Plant on Seneca Lake in New York.
- Greenidge was once an old coal-fired power station that lay dormant for six years. Investors bought it, repurposed it to burn gas, and it’s now running 24/7 to power 15,300 computers for proof-of-work mining – dramatically increasing its carbon emissions. global warming, local air pollutants, water pollution, noise pollution and electronic waste. .
- Earthjustice supports communities surrounding power plants in Dresden and North Tonawanda, New York and Hardin, Montana, as they combat planned cryptocurrency mining operations there.
- Earthjustice is also asking New York Governor Kathy Hochul to institute a moratorium on proof-of-work mining until its environmental and energy impacts can be investigated.