Cryptocurrencies – the Green Alternative to Carbon-based Economies
In view of the recent Australian bushfires, concerns for the long-term effects of climate change are understandably high. With sluggish action from those in power, people are eager for any progress towards a more sustainable and greener global economy. Thankfully, the catalyst for such an endeavor can be blockchain technology.
Blockchain and cryptocurrencies have had over 10 years to mature. Even though not a lot has changed in terms of how they work internally, people's perception about them has. No longer are they considered a gambling man's investment and just a trend that'll go away in a few months. Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and many more have been battling for their survival for a long time now. Just the fact that these cryptocurrencies are still alive and thriving is evidence enough that they are here to stay and be a viable alternative to the financial system.
Cryptocurrencies – the financial and green alternative
Cryptocurrencies have successfully made a case for themselves as THE asset class to hold and transfer value over the course of the past decade. There's one more incentive for the worldwide adoption: green economy. Although cryptocurrencies have been bashed about their energy consumption, the situation has been looked at only one-sidedly. The power that cryptocurrencies require has been greatly exaggerated and the sources have not looked at the energy consumption of the traditional alternative of Bitcoin – the banking sector.
Banks have both indirect and direct ecological effect. The industry has not only channelled a massive funding to the oil and coal mining industries, but it is also running thousands of buildings across the globe, with each having their own carbon footprint, which is not sustainable. But let's forget about the former and focus on their use of electricity.
Banks vs. Crypto
In a very detailed analysis of the energy cost of the current banking system, Bitcoin used 28.67 TWh back in 2017, which is at least 3 times less than what the banks needed to power their operations. Furthermore, according to the Cambridge Bitcoin Electricity Consumption Index, or CBECI, Bitcoin could be fully powered by the same amount of power that is wasted by idly running electronic devices in the US alone. The same study mentions that the energy produced worldwide through solar, wind and other renewable sources is enough to power Bitcoin 20 times over.
What's unique about cryptocurrencies is that they can be run completely on green energy. Replacing the power source for a mining farm with a green energy source cuts down its carbon footprint significantly. On the other hand, banks rely on people and processes that are immensely more complicated and would involve tremendous effort to make them truly green.
Reality – not science fiction
The good news is that mining farms being powered by 100% clean energy is not science fiction. For example, the world's biggest cloud-mining company, Genesis Mining, has set up facilities in Iceland, totally run on thermal energy, and in Sweden – on hydro.
Cryptocurrencies do not rely on individuals, paperwork or buildings to run. Rooting out those factors from their carbon footprint, the only thing Bitcoin and other cryptocurrencies need is energy or electricity. If you can give cryptocurrencies green energy, we get a green alternative to the world's carbon-based economy.