The reality is that as digital currencies are booming, so are their emissions. Admittedly, many believe that cryptocurrency is poised to revolutionize the financial system as we know it. However, in the excitement of crypto and what it can do, most people forget to consider the crypto’s growing climate impact. According to Forex Suggest reports, in 2022, Bitcoin was responsible for 86.3 million tons of CO2 emissions, and Litecoin replaced Ethereum as the second-most polluting token on Forex Suggest’s ranking.
What Should Everyone Know About Crypto’s Growing Climate Impact?
Bitcoin is a decentralized virtual currency which operates independently of a central bank or central issuing authority. On the other hand, its damaging effects on the climate are real and getting worse. Reports show that Bitcoin is still the most environmentally damaging cryptocurrency. Bitcoin, which has the biggest market cap, and other proof-of-work cryptocurrencies use more energy to do their work than whole countries do. This energy use is expected to rise in 2023. According to the Global Impact of Crypto Trading report by Forex Suggest published last week, Bitcoin was responsible for 86.3 million tons of CO2 emissions in 2022, up from 56.8 million tons in 2021.
The huge amount of computing power needed to facilitate the buying and selling of crypto coins across the network is a major contributor to the massive carbon footprint that the industry has. Every Bitcoin transaction is recorded via a public, decentralized online ledger that is constantly updated by a huge network of computers. This eliminates the need for a central authority to approve and track the movement of money. The blockchain, a distributed public ledger, is the heart of the cryptocurrency system but also its Achilles’ heel when it comes to energy consumption. Even though it is impossible to know how much electricity is actually used by cryptocurrencies like Bitcoin because different computers use energy in different ways, Digiconomist reported that Bitcoin mining uses more electricity than Sweden did last year.
Cryptocurrencies are becoming more and more popular at the same time that people all over the world are becoming more conscious of the dangers of climate change. The goal of this increased awareness is to reduce emissions and put a stop to climate change. As a result, there is a shift toward low-emission technology and green solutions.
Cryptocurrencies, once barely known, have recently become one of the most discussed assets in the financial world. As cryptocurrency prices have risen, an increasing number of people are looking to invest in the market by purchasing or mining cryptocurrency. However, adding new blocks to the blockchain and receiving cryptocurrency tokens is a computationally and energy-intensive process. It requires computers to solve complex algorithmic problems. One cannot generate new tokens without going through this step, and transactions can’t be added to the blockchain without it, either. All of which are contributing to crypto’s growing climate impact.