May 1, 2021
The world has become a much more environmentally-aware place, and whether you’re an eco-warrior or not, it’s a fact that sustainability and eco-friendly practices are at the centre of efforts to shape our evolving society.
In this changing world, green sectors are emerging quickly, spurred on by new legislation and eco-conscious sentiments. Existing sectors are going greener too - fintech is no exception.
However, there are question marks around two of the key pillars of the growing fintech ecosystem: cryptocurrency and the blockchain technology that underpins it.
While on the surface Bitcoin doesn’t seem to place immediate strain on the planet, critics have pointed to the energy it consumes as evidence against its green credentials.
The assumption goes a little something like this: Bitcoin isn't clean because it uses a ton of power and most “mining” takes place in China, a country not exactly known for being respectful to the environment.
Let’s break it down.
When people “mine” bitcoin, they’re not donning hardhats and pick-axes. Since bitcoin is completely virtual, these miners are actually using specialized computers to verify Bitcoin transactions using an algorithm.
Of course, this mining requires a ton of power. Bitcoin functions on a Proof of Work system, which while being labor intensive and demanding a lot of energy, is what makes the blockchain so secure.
Because of these high levels of consumption, energy plays a vital role in Bitcoin’s model — so much so, that miners often seek out the cheapest sources of power available. This means looking for energy inefficiency in any prospective grid, particularly in areas where there may be overproduction and underutilisation. More often than not, this ends up being right next to sources of renewable, green energy.
One useful point of comparison is the energy consumed for the production of gold, silver and other precious metals. The energy expenditure required to mine gold is marginally higher than it is for mining bitcoin. Cambridge researchers say Bitcoin mining consumes around 121.36 terawatt-hours (TWh) a year, whereas gold-mining operations expend 132 TWh per year. That’s just the mining. Precious metals also needed to be smelted, transported, stored and kept secure. Those processes use both energy and other resources.
There are also numerous other ways gold mining damages the environment, including landscape destruction, and the production of mercury and other toxic waste.
Relevant studies show that an overwhelming 74 percent of bitcoin mining is powered by environmentally friendly, green energy. This is particularly true for China, where sixty percent of all mining is conducted, with the vast majority taking place in Sichuan (where hydro-electric power is produced in abundance).
The Pacific Northwest is also a major crypto hotspot, home to America’s largest hydro-electric power facility, the Grand Coulee dam. It produces an abundance of cheap, clean power, making the surrounding area a favourite destination for cryptocurrency miners.
In Iceland, one of the largest Bitcoin miners in the world, Genesis Mining, runs on 100% green energy; it’s even launching a program to convert excess heat from mining into power for greenhouse operations in Sweden.
There is a symbiotic relationship between green energy and geography. Bitcoin mining is fairly mobile, so operations can easily be set up near green power sources. This makes using renewable energy a straightforward affair for Bitcoin, where other industries don’t have this luxury.
It’s no secret that as a whole, the UK’s transition towards renewables has been a slow, laborious process with insufficient adoption and a prolonged reliance on fossil-based power. With that being the case, fintech and Bitcoin should be applauded and hailed as a catalyst for change.
Dispelling lingering Bitcoin myths and adopting related products like the Bottlepay app can make cryptocurrency’s place in the green economy more secure, moving us closer to fully achieving global sustainability.