Cryptocurrency has rapidly increased in popularity over the past few years, with over 6,500 different cryptocurrencies existing at the time this article was written (about 100 are created per day). But running parallel to the rise in cryptocurrencies is the rise in climate change. We saw swaths of Germany flood this past summer and numerous wildfires in California and Australia in 2020. The relationship between cryptocurrencies and our planet isn’t a positive one.
Cryptocurrency is an inherently unsustainable practice. Cryptocurrency transactions cost massive amounts of energy. A single Bitcoin transaction burns approximately 1720 kilowatt hours of electricity. That is the same amount of electricity a single U.S household uses in 59 days. The majority of this electricity comes from dirty energy sources, like coal plants, which produce CO2 emissions. A higher demand for power will generate even more emissions, which is the last thing we need right now. This is a ridiculously wasteful use of energy at a time when rampant overuse of energy sources is so deeply detrimental to our planet. Crypto transactions are not the only energy-intensive activity in the cryptocurrency universe. Crypto mining is a particularly high energy cost activity. To mine new Bitcoin, for example, specialized computers solve extremely complex math problems. These computers are running 24/7 and require copious amounts of energy.
With all the energy being used by them, cryptocurrencies must be really useful and advantageous to society, right? Well, if using them for money laundering is beneficial to society, the answer is yes. Cryptocurrency is rarely used as actual currency (except in El Salvador) and people generally see it as a get-rich-quick scheme or as an investment vehicle. And in El Salvador, which has adopted Bitcoin as its currency, problems are arising. People who use the government sponsored app to exchange Bitcoin have reported losing money and being unable to get it back, even after filing complaints. Additionally, a poll found that 93% of businesses in El Salvador have received no Bitcoin payments, meaning that the currency is not popular with the people.
David Gerard, an author of two books on cryptocurrency, says it best: “Bitcoin burns a whole country’s worth of electricity for the most inefficient payment network in human history.” If Bitcoin was a country, it would rank as number 39 in annual electricity consumption, ahead of Austria. It is completely irrational to continue burning this much energy on a currency barely anyone uses. It is possible that as the metaverse grows more popular, cryptocurrency will have a larger role to play in virtual worlds, but at what cost?