Can crypto go green? – it’s easier said than done

    Key points

    • Governments all across the world are becoming increasingly concerned about crypto going green.
    • The “proof of work” principle underpins the Bitcoin mining process. It also consumes a tremendous amount of energy.
    • Some countries, such as China, have explicitly banned cryptocurrency mining.
    • Hive Blockchain, a Canadian company, is using a local hydropower plant to power its crypto mining operation in northern Sweden.

    Mining of Ethereum

    BODEN, SWEDISH REPUBLIC — A modern-day gold mine lies hidden in the cold, Swedish Lapland. It’s filled with thousands of computers instead of picks and shovels. Mining rigs are equipment that operates around the clock to uncover new units of cryptocurrency – in this case, Ethereum, the world’s second-largest coin.

    To do so, they must compete with people all around the world to solve a sophisticated arithmetic puzzle that becomes more difficult as more computers, or “miners,” join the network. The goal is to ensure the system’s security and avoid fraud.

    “Proof of work” is a concept that underpins the entire procedure. It also consumes a tremendous amount of energy. This foundation is also used by Bitcoin, the world’s most popular digital currency. It now consumes the same amount of energy as whole countries. Governments all across the world are becoming increasingly concerned. Some countries, such as China, have explicitly banned cryptocurrency mining.

    NFTs to go green: switching to renewables

    The mine in question, a warehouse-like structure in the garrison town of Boden, has a total of 15,000 mining rigs. Crypto to go green is important considering the factors it involves with respect to the planet. It’s larger than a regular soccer pitch at 86,000 square feet. Hive Blockchain, a Canadian company that specializes in mining cryptocurrency with green and renewable energy, operates the facility. Hive’s Swedish operations are powered by a local hydroelectric plant in Boden, which is located in the country’s northwestern corner. The region is known for its abundant supply of low-cost, renewable energy.

    “In the north of Sweden, 100 percent of the power is either hydropower or wind power,” said Johan Eriksson, a Hive advisor. “It’s completely renewable.”

    Crypto miners, according to Eriksson, are wasting energy capacity that would otherwise be wasted—in other words, energy capacity that is not required by homes in the region. Officials are concerned about the massive quantity of power required to run companies like Hive’s. The Swedish financial watchdog, Finansinspektionen, is urging the European Union to prohibit crypto mining due to its high energy use.

    According to Victoria Ericsson, a spokesman for the agency, “extensive use of renewable energy for crypto-asset mining could threaten Sweden’s climate goals.”

    She believes that developing electric vehicles, batteries, and fossil-free steel should take precedence over crypto mining.

    “Alternative consensus procedures to proof of work are available that would greatly lower energy consumption,” Ericsson continued.

    “We do not believe it is appropriate to exclude Bitcoin and the crypto world from efforts to enhance energy efficiency by other sectors of the economy.”

    Crypto to go green: Is decarbonization enough?

    Zumo, a crypto startup situated in Edinburgh, is a member of the Crypto Climate Accord, a group of companies working to achieve net-zero emissions in the crypto industry by 2030. According to Kirsteen Harrison, Zumo’s climate policy advisor, the effort is developing software that will be able to certify that the energy used in crypto mining is renewable.

    “Right now, there are a lot of trials going on with it,” she explained. “If that works out, perhaps it will spread to the rest of the industry.”

    According to some advocates, simply decarbonizing the creation of cryptocurrencies may not be enough. Crypto to go green is very necessary for the environment. Greenpeace and other environmental organizations are urging the bitcoin community to abandon the proof of work mechanism in favor of “proof of stake.” The significant computational expense of confirming new crypto transactions would be eliminated as a result.

    Ethereum is now undergoing a lengthy transition to proof of stake, which proponents claim will lower energy consumption by more than 99 percent. Other cryptocurrencies, such as Cardano and Solan, already use proof-of-stake networks. Moving a cryptocurrency like bitcoin away from proof of work, as Harrison shows, is easier said than done.

    “I don’t believe there is a method to get rid of proof of work,” she argues, “because no single participant has control over the system.”

    Not everyone is on board

    Although Hive and other crypto companies are increasingly using renewable energy to power their operations, there are still a lot of people who aren’t convinced. Some people are purposefully using gas that would otherwise be flared to generate energy, for example, for crypto mining. Bitcoin supporters had hoped that China’s prohibition on crypto mining would make the cryptocurrency more environmentally friendly.

    However, according to a peer-reviewed study published in February, bitcoin mining became dirtier in 2021, with miners fleeing to areas that are more reliant on coal and other fossil fuels, such as Kazakhstan and southern U.S. states like Texas and Kentucky. The decentralized nature of cryptocurrencies like Bitcoin contributes to the problem. Despite the fact that several organizations now claim to represent the sector, bitcoin has no central authority and anybody can join the network.

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