Cryptocurrency mining can be profitable, depending on which token you are mining where you are located, and how much the electricity costs. Regardless of whether or not it is profitable, it is a known fact that cryptocurrency mining uses up a lot of energy. So much so, in fact, that the small country of Iceland uses more energy for cryptocurrency mining than it does to power the houses people live in.
This energy usage is only set to increase, as the mathematical problems the mining rigs need to solve become increasingly more complex as more tokens are being mined. The question then is what will be done to solve the problem of rising energy costs for cryptocurrency mining? And what impact will it have on the environment, seeing as much of the energy comes from the burning of fossil fuels?
Putting the problem in perspective
How much energy is being used exactly? The Bitcoin network, which is the largest cryptocurrency network in existence, uses up 71 TWh every year. The next biggest network is the Ethereum network, which uses up to 20.5 TWh every year. To put it into context, the two networks use up as much energy as the entire United Arab Emirates. Alex de Vries, who is an economist, has predicted that the mining of cryptocurrency tokens will use up 0.5% of all of the world’s energy this year.
Renewable energy vs. fossil fuels
The massive energy consumption required to mine for cryptocurrencies would not be a problem if the energy came from renewable sources like solar power and geothermal energy. The latter kind of renewable energy is exactly what Iceland uses, which means that their cryptocurrency mining is not a huge environmental issue. However, not all countries are as big on renewable energy as Iceland is — far from it.
Take China, for example, which has enormous coal reserves. 70% of the energy consumed by the Chinese come from fossil fuel energy sources. If Chinese citizens were the only ones who used Chinese energy, this would not pose a huge problem either. Especially since the Chinese government has now outlawed the mining of cryptocurrency, as they are subsidizing the energy. However, China exports much of their energy to the rest of the world, and 60% of the networks’ energy consumption comes from China’s coal-driven power stations.
The solutions are many
A string of projects with a focus on the environment has now begun to tackle this issue. William Shatner and Solar Alliance are working together to build solar energy farms that can be rented out to cryptocurrency miners.
Foodtrax is an app using blockchain technology to let consumers track the supply chain of their groceries. Energy Blockchain Labs are addressing the carbon trading markets in China, which will help create more transparency. EnergiToken uses a peer-to-peer model to help consumers reduce their energy consumption. Plastic Bank is a project that uses the blockchain model to reduce the amount of plastic in the ocean. It would seem that, in spite of the huge energy consumption required by cryptocurrency mining, the blockchain will be the solution to environmental issues.