Cryptocurrencies are disrupting the financial world as we know it. And many newcomer investors have made a lot of cash on this hype. "It introduces so many opportunities, so many unique business models." "People say blockchain could end companies, as we know them." But it’s not all champagne and super yachts. Mining new cryptocurrency, and particularly Bitcoin, is actually kind of an environmental nightmare. Using up huge amounts of electricity and generating thousands of tonnes of Electronic trash in the process. But some new players in the crypto community are trying to change that. "We’re using crypto to clean up the environment." So Is it possible to green up bitcoin's dirty track record? And can mining digital currency ever actually be good for the environment? In 2021, bitcoin mining guzzled more electricity than the whole country of Thailand uses each year. And much of that power currently came from burning cheap fossil fuels. Definitely not green or clean. Let's start off with a little crash course on crypto. We’re going to focus on bitcoin, the most popular and widely owned digital currency.
To generate new coins they have to be mined and then recorded on the blockchain. The blockchain is essentially a permanent digital record of all the bitcoin transactions going on. And it’s decentralized. So to keep expanding the blockchain, millions of computers around the world have to show what’s called “proof of work”, focusing all of their energy on playing an ongoing game of ‘guess the right number’ to unlock new blocks on the blockchain and win bitcoin rewards. Lucrative for bitcoin miners, but highly unsustainable for the planet. Right now, you would release more CO2 into the atmosphere making one bitcoin transaction than you would taking a 6-hour flight from New York to Amsterdam. That’s around 2 million times more carbon emissions than a single Visa payment. Then there’s the E-waste. The mining computers burnout or need to be upgraded roughly every 12-18 months.
"On the whole, the Bitcoin network is absolutely not green." This is the Dutch Economist Alex de Vries. He set up the bitcoin energy consumption index back in 2014 to track the situation. "I think there will be a limit to how much governments will accept from this type of system. We already saw China banning Bitcoin mining. We're seeing these types of options being raised in Europe at the moment. Everyone's trying to realize their climate ambitions." Of all digital currencies out there, bitcoin is by far the worst offender when it comes to the environment. The clock seems to be ticking for crypto's most famous poster child to clean up its act. But, how could that work? A US company called Stronghold Digital Mining has come up with a solution.
And it all centers around these piles of abandoned toxic waste, known as GOB. "The GOB piles are very, very personal to me because I grew up in and amongst them my entire life." Bill Spence is co-chairman and a cancer survivor. Having long suspected that his kidney cancer was linked to playing on the GOB piles as a child, he’s now on a mission to clean them up. "There's been commercial mining in Pennsylvania for about 230 years. And these GOB piles are the remnants or waste from that mining. And they sat unchecked and really created an environmental impairment to our communities." There are hundreds of tonnes of GOB in Pennsylvania alone.
Sometimes they’ll spontaneously combust, adding dangerous pollutants into the air. And when it rains, toxic chemicals and heavy metals get washed into the groundwater and rivers too. Bill wanted to find solutions to this public health hazard. In 2017 he bought the Scrubgrass Power Plant in Northern Pittsburgh. It’s a facility specifically designed to generate electric power from safely burning the GOB. The process still releases CO2 but removes the acid gases and toxic particulates. The waste ash that’s leftover is also a green bi-product. It gets used as fertilizer to regenerate the surrounding land. So far, so good. But the financial numbers just weren’t adding up to make the power plant a profitable business. The local grid had enough cheap power from natural gas in the area and didn’t need to buy much more. But Bill and his team had an idea. What if they could turn the toxic GOB into Bitcoin? They built and integrated computer rigs into the powerplant site and used their cheap electricity to start mining. Suddenly, cleaning up GOB piles had become a very lucrative business – that didn’t need to stop on the borders of Pennsylvania.
"There are problems like this in other regions, ours is waste coal. There are other regions that have other contamination that potentially you could do things, that you could use cryptocurrency to adapt and build other forms of power." But not everyone can burn GOB piles. And the cleanup still doesn’t solve the CO2 emissions problem. So what about using green power sources to mine bitcoin? Texas is the cheap oil and gas capital of the US, but also has huge, untapped potential for green energy development. "There is more wind and solar in Texas than we could ever harvest." Jesse Peltan is the Chief technology officer of HODL ranch, a bitcoin mining company that only uses renewable power.
"We see a huge opportunity for Bitcoin mining to be mutually beneficial for the grid." They can act as a buffer in times of power surge and use energy that would otherwise go to waste. "But then at times when the grid is stressed, when it really needs that capacity, we can turn off and give that capacity back to the grid." The Texas miners can make a good profit selling their unused power back to the grid.
But what if international power grids can’t, or won’t, subsidize the downtime for the green energy-powered miners? "They will inevitably be losing the competition to the rest of the network. And the ones that will survive will be the ones with the most stable power sources. And those unfortunately, typically happen to be fossil fuel based power sources." As renewable energy becomes cheaper.
A hybrid power model is becoming more popular with bitcoin miners. In 2021, 56% of bitcoin’s global power usage came from renewable sources. But with so much of that energy being wasted to show "proof of work", Bitcoin is still not cutting it when it comes to sustainability.
Other smaller crypto currencies like Cardano, Tron, Polkadot and EOS were designed from the beginning to use a more efficient mining system called “proof of stake.” It uses about 99% less energy to run because individual mining devices can verify transactions. Rather than the whole network competing, individuals stake some of the coins they already own as a security deposit, and the system randomly chooses who gets to "mine," more coins. If you still want to stick with bitcoin but are concerned about the carbon emissions, the underlying blockchain technology can help with that. You can now offset your footprint by purchasing carbon credit tokens that are blockchain verified. The money you invest travels directly via blockchain to fund conservation efforts.
Crypto celebrities the Winklevoss twins just invested $4 million dollars to offset their Bitcoin holdings for their crypto exchange Gemini, and Jack Dorsey’s payment company, Square – recently renamed Block – has also committed $10 million dollars to green energy projects. But if you don't have a couple of million chilling in your bank account or your crypto wallet, can you still do this? A Brazilian environmental tech company called Moss.earth is becoming a popular option for climate-conscious crypto fans. "And what we have done is to turn crypto investments into, you know, green investments." Luis Adaime is the founder of Moss.earth.
Anyone can buy their verified carbon credits at the click of a button. They’re called MC02 tokens. "You can calculate your own pollution from, you know, driving cars using electricity at home, that kind of stuff. And you can buy the equivalent carbon credits." Using blockchain tokens provides a clear record of everyone’s green investment transactions, and supposedly the money travels directly to forest conservation projects in the Amazon. The company says the sale of MC02 tokens has compensated forest projects with over $15 million dollars and helped preserve around 500 million trees. So perhaps In the future, carbon emission offsets will just be built into all the polluting transactions we make. "We have created, for example, with wrapped.com, green Bitcoins, in which when you buy a Bitcoin it already comes with an allocated amount of carbon credits." So there are pioneers trying to clean up crypto's act. But right now they're still few and far between.
Bitcoin and Digital currencies are here to stay and if we want to make them sustainable players, investors, companies and governments will have to start changing the rules of the game. "Are you buying any cryptocurrencies? Which ones? And how do you feel about their environmental impact? Let us know in the comments below and don't forget to subscribe for more videos!".
