It’s this public ledger, called the blockchain, that’s at the crux of crypto’s energy problem.
But in the wake of the 2008 financial crisis, trust in the financial system (and the government agencies tasked with regulating it) bottomed out and sent disillusioned techies looking for another, more populist solution.Ĭryptocurrencies like Bitcoin offer up an alternative: Instead of requiring a centralized authority to approve and track the movement of money, every Bitcoin transaction gets logged on an anonymous, online public ledger that’s maintained by a sprawling network of computers. To explain, we’ll need to get a little technical.įiat money-the everyday kind backed by the federal government-is tracked carefully on databases by financial institutions like banks and has been for more than a century. So what, exactly, makes crypto such an energy-intensive endeavor?Ĭrypto’s massive carbon footprint stems from the mind-boggling computing power required to carry out the buying and selling of crypto coins across the network. Given the world’s exceedingly tight timeline to reach net-zero emissions and avoid a climate catastrophe, the crypto boom poses a big problem. In comparison with more traditional online banking, a single bitcoin has the same carbon footprint as 330,000 credit card transactions. In fact, Google could power all of its global operations on that amount of energy, seven times over. That puts it on par with the usage of the entire country of Sweden.
Ask a crypto skeptic? It’s all glorified gambling.īut no matter where you fall on crypto’s future, there’s no debating that the digital currency has a decidedly real-world impact on the climate.īitcoin-the world’s oldest and most popular form of cryptocurrency, with a total market value that topped $1.3 trillion-now eats up half a percentage point of all the electricity consumed in the world. Ask a cryptocurrency enthusiast where digital currencies are headed, and you’ll hear that Bitcoin is poised to revolutionize the financial system as we know it.
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