Crypto Mining: The Environmental Effect
Crypto and the Environment. It’s been a hot topic as of late and many don’t understand why. Today I’ll shed some light on what exactly is causing the concern and what some are trying to do to help.
To understand what the big deal is about crypto and the environment, first one must understand what Bitcoin mining is to begin with.
Mining all the livelong day
Have you ever wondered how Bitcoin is created?
It’s through ‘mining’. Crypto mining is the process by which new cryptocurrencies are ‘mined’ and added into circulation. This also serves as a critical component of the maintenance and development of the network.
As we know, one of Bitcoin’s most significant features is that it is decentralized. So as there is no central authority controlling the blockchain/network, individuals have to do the work ourselves, through mining.
Miners are rewarded for completing ‘blocks’ of verified transactions, which are added to the blockchain. If you are mining BTC, you are rewarded in BTC. If you are mining ETH, you are rewarded in ETH, etc.
All this mining takes computing power- and lots of it- Although that wasn’t always the case. Back in 2009, you can mine bitcoin with a simple desktop PC. Fast forward to 2021 and you’re gonna need a substantial amount of computing power. Like a room full of computing power, type of substantial.
Recently El Salvador has turned to volcanos. Yes, volcanos.
Salvadoran President Nayib Bukele recently posted a short video of workers installing a shipping container full of cryptocurrency mining rigs at a geothermal power plant surrounded by thick jungle. “First steps … #Bitcoin,” the president tweeted.
The implications, not just for crypto but for geopolitics, could be huge. El Salvador sits on the edge of the Pacific “Ring of Fire” and has 20 “potentially active” volcanoes, according to VolcanoDiscovery.com. They run the length of the entire country and have been harnessed to generate 21.7% of the country’s energy, according to the U.S. International Trade Association. (For comparison, all renewable energy sources together comprise only 12% of U.S. energy.)
Recently Miami, Florida (USA) Mayor Francis Suarez has been approaching cryptocurrency miners about the prospects of setting up operations near South Florida’s Turkey Point nuclear-power plant.
While many are concerned about its use, it may offer a “cleaner” solution for the increasing need in energy consumption that crypto mining will no doubt continue to require.
Crypto and the Environment - Not All Bad News...
Each year, investment bank Lazard releases a breakdown of energy costs by source. Its 2020 report shows that many of the most common renewable energy sources are either equal to or less expensive than conventional energy sources like coal and gas. And the cost of renewable power keeps going down.
With that and other options such as solar and wind energy, the future isn’t as bleak as some put it.
Regardless of what is done to solve this issue, one thing is clear:
The world doesn’t stop for anyone -not even Bitcoin.
Author: David Gonzalez
Digital Dave is from South Florida and has 17+ years of experience in the fields he loves to write about: finance, crypto and sports betting.