Why Cryptocurrency Is Bad for the Environment

Is cryptocurrency bad for the environment? Yes. Indeed, all economic activity contributes to a collective environmental impact. But why and how is cryptocurrency worse compared to other forms of money?

This article provides an overview of cryptocurrency’s footprint and discusses potential environmental improvements—some of which we are already seeing take place in the industry.

Environmental Impacts of Cryptocurrency

The problem with cryptocurrencies is their energy consumption. The majority of that consumption comes from crypto-mining, which is the use of computers to solve increasingly difficult 64-digit strings of random numbers and letters.

The “miner” who solves this riddle first is rewarded with new Bitcoins or other currencies, which can earn the miner hundreds of thousands of dollars. This has led to a Gold Rush-like search for faster and more powerful computers—and higher and higher amounts of energy consumed.

In 2021, Bitcoin mining alone consumed an estimated 121.36 terawatt-hours (TWh)—more electricity than Argentina, or roughly what’s annually used by vampire power in the United States.

One influential 2018 article in Nature Climate Change warned, “Bitcoin emissions alone could push global warming above 2 degrees C.” (The article has been criticized for not adequately accounting for the different sources of electricity Bitcoin mining uses, an estimated 50% of which are renewable.) Indeed, the energy needs of cryptocurrencies have become an issue of major concern, leading to a Congressional hearing on “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains” in January 2022.