Bitcoin and other “cryptocurrencies” have slowly been creeping into the social consciousness. Increasing numbers of businesses are accepting these “digital currencies” alongside cash and credit cards. But are they a viable and socially responsible alternative?
Mining demands computing power
The challenge for Bitcoin’s sustainable credentials comes from how it is produced. Each unit of currency – a coin – is “mined”, a process that involves solving complex mathematical equations. Each correct answer produces one Bitcoin. Other cryptocurrencies such as Ethereum, Ripple and Litecoin use similar techniques and are growing fast.
Solving these equations requires a lot of high power computers, which consumes substantial amounts of energy. As the equations have become more complex, more computing power and energy is needed. By comparison, the MacBook Pro this is being written on has an 87W charger, while a computer dedicated to Bitcoin Mining will use at least a 1000W power supply.
Distributed currency = distributed energy use
Bitcoins are stored in a public ledger or Blockchain. Each time Bitcoin is spent the ledger is updated on every computer where it is held. Vast amounts of data are shuffled around the Internet as individual computers check, adjust and process payments.
All of this processing requires energy. For an individual paying with Bitcoin from their mobile phone or laptop, this is barely noticeable. However, whereas a traditional credit card transaction is handled by a data centre and consumes relatively little power, a payment by Bitcoin is processed by every computer on its network. The network effect means the more people use Bitcoin, the more energy a single transaction requires.
Bitcoin is a small country called Ireland
This is not a small problem. In July 2018, PWC estimated Bitcoin used as much power as the entire country of Ireland. With more people adopting the currency and trying to mine new coins, this will certainly have increased.
There are some groups trying to reduce the impact of Bitcoin mining. Nasty Mining, for example, claims only to use renewable energy inits mining efforts. The wider move to renewable energy in data centres and homes will also benefit the currency’s green credentials.
However, there remains a sizeable proportion of the mining community for whom sustainability is not a concern. The older Bitcoin gets, the more difficult it is to find new coins, which demands ever more computing power and energy.
The choice is yours
Whether you want to use Bitcoin in your day-to-day transactions is a personal choice. The environmental impact of your individual activity is likely to be quite low and no more noticeable than using a credit card or PayPal. Accepting it in your sustainable business may be a different matter as you will have to consider the wider energy use of how coins are createdand transactions processed.
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