You must have come across people lamenting the harmful effects of cryptocurrencies on the environment. There is an ongoing debate on the level of crypto footprint, but the truth is that wherever the mining for crypto coins depends on unclean energy sources like coal, environmental effects will be negative. However, most of the crypto mining today is happening through renewable energy largely because their costs are much lower. The crypto trading apps like Bitcoin Bank offer you a green platform to trade as every transaction is digital and swift.
Depending on the type of energy being used for mining, cryptocurrencies will produce almost 3-15 billion tons in carbon emission. Of the many countries engaged in mining, China is a leading producer and user of coal energy. Its mines are in the Inner Mongolian provinces and Xinjiang region where they use cheap coal energy so that companies save money on energy prices. But if these costs were to be compared with energy costs incurred through use of renewable energy sources in Canada, you will find that China emits much higher carbon emission.
In 2017, most of China’s Bitcoin mining took place in Sichuan where 90% of energy was derived from renewable resources. According to research by Coin Shares, almost 77.6% of mining facilities use electricity from renewable sources while 22% use energy from nuclear producers and fossils. All large-scale mines are confined to the Pacific Northwest, Northern Scandinavia, Upstate New York, Iceland, etc that use renewable energy sources.
When value of cryptocurrencies falls below the cost of production, it makes mining unprofitable because the energy expenses are very high. The most profitable mines are those that operate at low costs getting cheap electricity because of availability of surplus energy. Moreover, to cut down operational costs, miners seek affordable spaces for storing high-seed servers and cooling systems for diffusing the heat generated by such servers. This indicates wastage of a huge amount of electric power that could light up many homes.
The increase in prices of Bitcoins and profitability of mining operations encouraged “rogue operators” or unauthorized miners who started operating in residential areas besides the large-scale companies. Since such activities are unregulated it presents huge risks to people’s safety and negatively impacts the energy grid in any neighborhood. Moreover, these small-scale mines are not equipped for handling the huge volume of energy consumption. Continuous electricity usage at such high levels puts a lot of strain on the neighborhood power lines and may damage the grid equipment that is not meant to carry high-density loads. This can end up risking the lives and safety of neighboring residents.
To sum up, crypto mining companies may attract investors but there are hardly any benefits for communities where they are located. As the process is largely computerized, there is no help to the community in terms of employment opportunities. To mitigate this impact, both federal and local governments need to set a regulatory environment that will help the community adapt to this phenomenon. Since there is no end to how far Bitcoin prices can go up, there are no limits to resources which can be used for crypto mining. This is why stricter regulations must be enforced to sustain crypto mining without taking away the local people’s access to cheap energy. Policy makers need to find ways to stop rogue operators while securing a balance between economic growth and public development.