The Elephant in the Room is on Fire: A Discussion of Crypto & The Climate

4 min readJan 11, 2022

You’ve heard it. I’ve heard it. Elizabeth Warren has heard it. Cryptocurrency is bad for the environment.

So, let’s actually talk about it. Not just from the energy-usage perspective, which we will quickly cover, but also from the moral perspective. Some questions I hope we can ponder together:

How much energy is crypto using?

Do you believe crypto is a “moral” use of energy?

What is being done to make crypto more climate conscious?

Before diving into this discussion, I will quickly cover the basics of why crypto uses so much energy:

Proof-of-Work: An Energy Guzzler.

In order for a block to be published onto the blockchain, a miner must verify the data in the block. To verify the data, a miner must solve a “puzzle” of sorts, which can take thousands, if not millions, of attempts. And that one miner is not the only one trying. It’s a competition. The fastest miner wins, and their reward is cryptocurrency.

So, why a puzzle? It’s on purpose. The software of many cryptocurrencies such as Bitcoin and Ethereum 1.0 respond to increasing competition by making the puzzles harder and harder, which is important for security. The energy usage is what keeps everyone’s money safe.

So, how much energy is it? The answer is that under the proof of work system, it fluctuates tremendously based on the price of cryptocurrency.

If you want a number to try and quantify it: according to a recent study, the carbon footprint of Bitcoin is equivalent to that of New Zealand — emitting nearly 37 megatons of carbon dioxide every year ((NOTE: this estimate is contested — estimates vary)).

Clearly, crypto uses a lot of energy. However, is it a moral use of energy? Is the energy usage justified?

Is Crypto a Moral Use of Energy?

Here is what I have found: It comes down to whether or not someone believes in cryptocurrency as the future. If someone believes it’s a mere ponzi scheme, then yeah, it’s a clear waste of energy. However, if someone believes it’s the future of the monetary system, then those proponents are more likely to, yes, defend its consumption, but also try to find ways to make crypto more green.

** Going to link some articles I enjoyed reading about the debate at the end of this article. If you have an article you read you think others should see, DM me and I will add it to the list!**

What is being done to make it more green?

A few things.

Proof of stake:

A consensus mechanism created as an alternative to PoW that uses less energy and is more efficient. It works like this: owners need to stake 32 ETH to become a validator. A validator is then chosen at random to create blocks, as well as confirm ones they don’t create. Validators are awarded both when they create blocks or attest someone else’s block. It is called proof of stake because the validators money is at stake. So, this uses a lot less energy because nobody is competing and using a tremendous amount of computational power. Ethereum 2.0 uses PoS instead of PoW.

Read more here: https://ethereum.org/en/developers/docs/consensus-mechanisms/pos/

Crypto-Enthusiasts for the Cause:

I found this great article that discusses some amazing groups, protocols, DAO’s, etc that are currently fighting the good fight to intersect crypto and climate. See some of these awesome initiatives here:

https://joshgreen.substack.com/p/where-do-climate-and-crypto-intersect#:~:text=Put%20another%20way%2C%20Layer%202%20solutions%20are%20coming%2C,crypto%20becomes%2C%20it%20will%20still%20require%20some%20energy.

Closing

I would love for this article to serve as a discussion. I know this topic can lead to some heated debates, but I truly believe these conversations are necessary. I tried my best to do this topic justice.

Thank you as always for joining me on my learning journey, and more importantly, for allowing me to be a part of yours. Stay healthy. Stay happy. Chat soon.

>>>>>>>>>>>>>>>>

REGANS NOTES:

The Moral Argument:

Essentially: Bitcoin ecosystem consumes less than 10% of the energy required for the traditional banking system. Lots of Bitcoin mining partly relies on environmentally friendly resources (BUT also does use fossil fuels). Lastly, there is innovation to make crypto more green.

Readings:

https://dailycoin.com/guide-for-dummies-why-crypto-is-not-bad-for-the-environment/#:~:text=Crypto%20Is%20Not%20Bad%20For%20the%20Environment%20The,the%20mining%20of%20cryptocurrencies%20comes%20from%20renewable%20sources

The Immoral Argument:

Essentially: Bitcoin disproportionately impacts marginalized communities because crypto producers take advantage of weak regulations to gain access to cheap energy. As well, it is a tremendous amount of energy (even if relatively its a lot less than the current monetary system)