Green Mining: Exploring Environmentally-Friendly Practices In The Cryptocurrency Industry

Cryptocurrencies have gained increased mainstream attention in the past decade. These currencies and the technologies behind them can be complex but offer significant promise, especially in finance and trading.

Creating a crypto coin can be a simple process. As of August 2023, there were 9,321 active cryptocurrencies in existence, according to Statista.

However, many individuals and organizations have raised concerns about the environmental impacts of crypto mining and trading.

With climate change and environmental damage being a looming reality, finding eco-friendly ways to participate in cryptocurrency should be a priority.

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Image by Zoltan Tasi on Unsplash

Environmental Concerns Surrounding Cryptocurrency

Cryptocurrency’s popularity comes from its potential to revolutionize our day-to-day transactions, from buying items for an online game to purchasing or selling a new home.

However, despite the appeal of cryptocurrencies and blockchain technologies within the tech and finance spheres, these technologies have significant issues.

Environmentalists, climate advocates, and other concerned parties have raised alarms about the environmental effects of cryptocurrencies, particularly during the mining and trading processes. Here are some of the most prominent environmental impacts surrounding crypto:

Energy consumption

Cryptocurrency mining and verifying processes require a significant amount of computational power. This high consumption is particularly prominent for proof of work (PoW) based coins like Bitcoin.

Mining for these coins often requires devices to solve complicated mathematical problems to validate crypto transactions and add new blocks to the blockchain. This process demands a substantial amount of energy, often from fossil fuels.

The energy consumption of some cryptocurrency networks is comparable to that of small countries. Bitcoin mining, in particular, has been criticized for its substantial energy requirements.

From 2020 to 2021, the Bitcoin mining network consumed 173.42 Terawatt hours of electricity worldwide. This energy consumption level would have ranked Bitcoin 27th in the world if it were a country.

Carbon emissions

Many crypto-mining operations rely on existing power grids to support their operations, with most running on fossil fuels. Given the large amount of electricity that cryptocurrency mining and transactions use, their carbon emissions follow suit.

Regions where electricity is generated primarily from coal, for example, can have a higher carbon footprint associated with cryptocurrency mining and transactions.

Research by Digiconomist found that a single Bitcoin transaction consumes 369.79 kgCO2. This figure is the equivalent of 819,587 VISA card transactions or 61,632 hours of streaming YouTube videos. Ethereum also used to have a larger carbon footprint before it transitioned to a proof of stake (PoS) system.

High levels of carbon emissions can be a significant contributor to climate change. Practices like PoW crypto mining and trading often release large amounts of carbon, trapping heat and causing worldwide temperatures to rise.

Environmentally-Friendly Practices in the Cryptocurrency Industry

While cryptocurrencies are deemed revolutionary due to their decentralized nature, they face increased scrutiny due to their environmental impact.

However, many concerned parties are not disregarding this issue and recognize the need for more eco-friendly practices within the cryptocurrency sector.

Energy-efficient mining algorithms

Cryptocurrency mining, particularly through PoW algorithms, has been criticized for its energy-intensive nature.

Validating transactions with these algorithms requires solving complex puzzles for verification. Validators must also compete to solve these puzzles, requiring massive amounts of power.

To counter this problem, developers are exploring and implementing energy-efficient mining algorithms. These algorithms aim to achieve similar results with reduced computational requirements. As a result, crypto miners and traders can minimize the energy consumption of the network.

One of the most prominent examples of these algorithms is the transition from proof of work (PoW) to proof of stake (PoS) in some cryptocurrencies like Ethereum.

Ethereum’s energy consumption dropped significantly from an estimated 82.78 TWh per year on September 12, 2022, to 0.01 TWh on September 16 that same year. The cryptocurrency’s energy consumption has remained at that level ever since, according to Digiconomist.

PoS eliminates the need for resource-intensive mining operations. While Ethereum mining still offers tokens as rewards, the system chooses validators at random. They can then create new blocks based on the amount of cryptocurrency they hold and are willing to put up as collateral.

Renewable energy utilization

Another way the cryptocurrency industry can make the practice more sustainable is through their choice of energy sources.

Fossil fuels and non-renewable energy sources are primary contributors to carbon emissions that lead to climate change. A significant part of the environmental impact of cryptocurrency mining comes from the reliance on these energy sources.

As a response, some mining operations are transitioning to using renewable energy. Groups are exploring sources like solar, wind, hydro, and geothermal power as sustainable alternatives to power cryptocurrency mining farms.

Initiatives to establish mining operations in regions with abundant and cheap renewable energy sources are gaining traction. These practices help reduce the carbon footprint of crypto mining and transactions and contribute to developing clean energy infrastructure.

Last year, Genesis Digital Assets, an industrial-scale Bitcoin mining firm, announced its plan to establish a self-hosted mining facility in Sweden in 2024. They claim this facility will use 100 percent clean energy sources.

Energy recapture technologies

Energy recapture technologies, also known as energy recovery or energy harvesting technologies, are methods that capture and reuse energy that would otherwise go to waste.

In cryptocurrency, these technologies help maximize the utility of the energy used by miners and traders, making the process more efficient and environmentally friendly.

One approach involves utilizing excess heat from mining equipment for other purposes, such as heating buildings or powering greenhouse facilities. This process helps offset the environmental impact by repurposing otherwise wasted energy.

Home developers can use this residual energy for their electric and heating upgrade plans for investment properties like condominium buildings.

Another example of energy recapturing is through the use of liquid cooling systems. Traditional air cooling systems used in cryptocurrency mining generate additional heat.

Liquid cooling systems are more energy-efficient and can dissipate heat more effectively. The heated liquid can subsequently be used for heating purposes or directed to other energy recovery systems.

In real estate, it’s worth mentioning that there are options to include an energy-efficient mortgage add-on. This benefit demonstrates a growing trend toward sustainability not just in cryptocurrency mining but in the financing of real estate projects.

Community and industry collaboration

The environmental concerns and issues in crypto mining and trading fall onto the shoulders of the entire community. Addressing these concerns requires collaboration between communities, industry players, and developers.

Some cryptocurrency projects actively engage with local communities and various sectors to ensure their operations align with sustainable development goals.

Parts of the cryptocurrency sector are coming together for industry-wide initiatives, forums, and partnerships to share best practices and promote the adoption of eco-friendly technologies.

This collaborative approach fosters a sense of responsibility and accountability within the cryptocurrency community.

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Image by Nicholas Doherty on Unsplash

Advantages of Sustainable Crypto Practices

Adopting sustainable practices in the cryptocurrency industry comes with several advantages. Aside from being more environmentally friendly, these practices offer benefits to industry players and the crypto community itself.

Here are some critical advantages of embracing sustainable practices in the cryptocurrency sector:

Economic efficiency

Sustainable crypto practices like utilizing renewable energy sources and implementing energy-efficient technologies contribute to cost savings. The long-term stability and often lower costs associated with renewable energy can enhance the economic efficiency of cryptocurrency mining operations.

Instead of incurring massive energy costs associated with non-renewable energy, sustainable practices help reduce this consumption. As a result, miners and traders can keep more of their profits.

Lower environmental impact

The most apparent benefit of sustainable crypto practices is reducing the industry’s carbon footprint. By minimizing energy consumption and moving away from fossil fuels, cryptocurrencies can play a role in mitigating climate change.

Innovation and technological advancements

Environmental sustainability challenges the cryptocurrency industry to innovate and develop new technologies. Sustainability efforts have led to advancements in several areas, such as algorithms, hardware designs, and energy recapture technologies.

A commitment to sustainability also attracts environmentally conscious developers, investors, and professionals. This influx of talent can drive further innovation and contribute to the industry’s overall improvement.

Long-term viability

Sustainable practices contribute to the long-term viability of the cryptocurrency industry by mitigating environmental risks. This approach helps the sector adapt to changing dynamics, including potential shifts in regulations and consumer preferences.

Consumers and the general public are also becoming increasingly environmentally conscious. As this awareness grows, industries fall under increasing pressure to adopt sustainable practices.

By embracing sustainability, the cryptocurrency industry can better adapt to changing market conditions and government regulations.

Embracing Sustainability in the Cryptocurrency Sector

The cryptocurrency industry remains under scrutiny for the harmful effects mining and trading have on the environment. It only makes sense for the sector to act upon these issues for the good of the industry and the world in general.

Integrating sustainable practices ensures a more ethical and innovative approach to cryptocurrency development and usage as the sector evolves.

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This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. Benzinga does not make any recommendation to buy or sell any security or any representation about the financial condition of any company. Cryptocurrency is a volatile market; do your independent research and only invest what you can afford to lose. New token launches and small market capitalization coins are inherently more risky than large cap cryptocurrencies. These tokens are subject to larger liquidity and market risks.

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