Experts in cryptocurrency, energy and more spoke about the potential harms and benefits of cryptocurrency on the environment in a talk called “Sustainable Energy, Computing and Cryptocurrency” held Tuesday at the Wisconsin Energy Institute’s Forward in Energy Forum.
Kyle McDonald is an artist working with code to explore the possibilities and consequences of new technologies. Currently, McDonald is researching the ecological impacts of the cryptocurrency Ethereum and he created a project quantifying its environmental harm.
Both Bitcoin and Ethereum run on a system called Proof of Work to add new transactions to the blockchain. McDonald said this process ensures that transactions are kept up-to-date across the blockchain, or database, as they are mined by computers.
“Mining is sometimes described as solving a complex mathematical puzzle, but that makes it sound more honorable than it actually is,” McDonald said. “It’s really just about guessing random numbers as fast as possible. So think about the mining processes converting electricity into currency.”
According to McDonald, there are somewhere around 10 million computers around the world running to convert electricity into Ether as quickly as possible. McDonald also said that cryptocurrencies based on Proof of Work systems are likely close to 1% of global electricity use.
This amount of energy use is problematic, McDonald said, when it’s generated using fossil fuels. He calculated the energy mix in different countries using a calculation of how many grams of carbon dioxide is released in the atmosphere for every kilowatt-hour of electricity.
McDonald found that cryptocurrency was resulting in the release of seven megatons of CO2 per year — the typical coal power plant, he said, produces around three megatons of CO2 per year. The emissions from cryptocurrency mining could be compared to the amount of energy used by 500,000 people in the U.S. each year.
Chief Sustainability Officer for DevvESG Streaming Destenie Nock said some blockchain technologies could be used to verify carbon emission reductions.
Blockchain technologies keep track of transactions and data to ensure the data isn’t incorrectly duplicated, Nock said. This technology could be used to track carbon credits to ensure they aren’t counted multiple times by different groups.
“As we are moving towards a net-zero energy future, there’s a lot of data coming in and there’s a huge risk that people will be double-counting that data,” Nock said. “I think oftentimes when people hear about blockchain, they just immediately jump to the cryptocurrencies they jump to like Bitcoin. But really, blockchain technology is a data ledger and it can you know, introduce some more verifiability as well as tracking of this data.”