New report highlights the environmental impact of crypto-mining
The burgeoning cryptocurrency industry has been dealt another blow just as prices continue their upward trajectory.
With many investors already uncertain about allocating to cryptocurrencies due to regulatory, taxation, and security issues, a new study has highlighted the environmental cost of producing the best known of the digital coins, Bitcoin.
As more investors are demanding sustainable investments, the news may be enough to make cryptocurrencies unacceptable for them.
A team from the Technical University of Munich (TUM) analyzed data from the IPO filings of hardware manufacturers and the IP addresses of Bitcoin "miners" to determine the carbon footprint of the cryptocurrency.
They discovered that the use of Bitcoin causes around 22 megatons in CO2 emissions annually - comparable to the total emissions of cities such as Hamburg or Las Vegas.
In recent years Canada has emerged as a popular location for cryptocurrency mining operations due to the relatively low cost of power, although the study determined that just 15% of Bitcoin network computing power is in North America compared to 17% in Europe, and 68% in Asia.
Why the carbon footprint?
For those unfamiliar with cryptocurrencies, it may seem strange that there is an environmental cost of producing a ‘virtual’ coin at all. But the process involves a network of computers with one arbitrary machine validating a coin by solving a complex mathematical puzzle. This process uses a large amount of electricity, leading to the large carbon footprint.
Christian Stoll, who conducts research at the Technical University of Munich (TUM) and the Massachusetts Institute of Technology (MIT), acknowledged that there are bigger factors contributing to climate change, but that the issue needs to be addressed.
"The carbon footprint is big enough to make it worth discussing the possibility of regulating cryptocurrency mining in regions where power generation is especially carbon-intensive," he said. "To improve the ecological balance, one possibility might be to link more mining farms to additional renewable generating capacity."