Crypto and Climate
I keep reading that Bitcoin, Ethereum, NFTs, etc are a climate issue.
It is true that proof of work mining which secures the Bitcoin and Ethereum blockchains uses electricity to do that work. And certainly there are carbon emissions associated with that electricity consumption.
However, it is not as simple as that for the following reasons:
1/ Proof of work miners are constantly seeking the lowest cost of electricity to mine with. That leads them to electricity sources like geo, hydro, solar, and wind. There is a meaningful financial incentive to mine on clean energy in many cases.
2/ The Ethereum blockchain is moving to proof of stake and moving away from proof of work. Many other popular blockchains, like the Flow blockchain that powers NBA Top Shot and other NFT experiences, already use proof of stake. Proof of stake consensus uses vastly less electricity to secure the network.
3/ There is a narrative that much of China’s Bitcoin mining happens on coal powered electricity, but I have read that most of it happens on China’s overbuilt hydro capacity.
4/ Proof of work mining can stimulate the buildout of clean energy capacity because it can produce immediate monetization of that capacity.
It is time for the crypto industry to study this issue carefully and provide real data. I would like to see carbon emissions from proof of work mining measured over time and projected into the future.