By: Leen Heresh

The new captivating and trendy investment taking the world by storm is Cryptocurrency.[1] It is skyrocketing in popularity and is making its way into our legislature.[2] Some are aware of cryptocurrency’s existence, but “more than 1 in 3 cryptocurrency investors know little to nothing about it”, including myself at first.[3]

The first Cryptocurrency was Bitcoin and was created by Satoshi Nakamoto (pseudo name).[4] Satoshi introduced Bitcoin as a “peer-to-peer” electronic cash system to reduce our reliance on major financial institutions like Visa and Mastercard for every transaction.[5] Cryptocurrency emerges when a computer validates a transaction, as opposed through a financial institution through a process known as ‘mining.’[6] As opposed to validating transactions on a centralized network, mining serves to validate transactions on a decentralized network—which in turn consumes a considerable amount of electricity.[7]

The heavy reliance on electricity, in combination with the rising number of Bitcoin miners, has created a tremendous amount of pressure on an already taxed grid.[8] Although there are many positive effects and incentives associated with Cryptocurrency, the long-term environmental implications of continuous mining that utilizes electricity from non-renewable sources will only hinder our efforts towards less reliance on fossil fuels.[9]

Good: Cryptocurrency Could Replace Cash and Digital Payments Methods

The Federal Reserve Bank (“FRB”), the agency responsible for printing currency, has a current printing budget of a little over $1 million annually.[10] Considering the materials used to print the dollar include cotton and linen, FRB estimated a lifespan of 4.7 years for the $5 bill and nearly 22 years for the less circulated, $100 bill.[11] Even the plastic cards we swipe (or with contactless payments with our phones, thanks to Apple) are environmentally harmful.[12] “Banks issue over six billion plastic credit cards annually.”[13] “The most common credit card plastic usually consists of polyvinyl chloride acetate – or PVC/PVCA, as it is commonly known.”[14] This combination takes nearly 400 years to completely break down—leaving a ginormous carbon footprint.[15] From a financial standpoint, our centralized systems control every aspect of lending and spending which is why they keep a percentage of every single transaction.[16]

Bad: Bitcoin Mining Requires a lot of Energy

Without getting into the nitty-gritty of how mining takes up so much energy, all you need to know is this: validating transactions is the key to the prize, and the faster, more powerful computer is the more likely one to beat everyone else who is trying to solve the very same puzzle.[17] One note—calibration occurs when more attempts are made by miners, making the ‘puzzle’ even more difficult.[18] This is why “miners have warehouses packed with powerful computers, racing at top speed to guess big numbers and using tremendous quantities of energy in the process.” [19]

The House Committee on Energy and Commerce reported that current cryptocurrency mining energy usage is in direct contradiction of our national effort to reduce greenhouse gas emissions.[20] The committee’s report cited reports revealing that in 2021 alone, Bitcoin mining has emitted 56.8 million tons of carbon dioxide into the atmosphere.[21] To put this in perspective, the total carbon dioxide emissions from Bitcoin and Ethereum in 2021 “is ‘equivalent to the tailpipe emission of 15.5 million’” vehicles.[22] Furthermore, cryptocurrency mining is wasteful.[23] Given the need to run the electronic equipment continuously, even the most advanced technology will have a reduced lifespan.[24] This waste is equivalent to the small IT equipment of the Netherlands[1].[25]

The Light at the End of the Tunnel: Renewable Energy Source and XRP.

It is glaringly apparent that collective global action needs to be taken if the world wants to slow down climate change.[26] “Researchers at the University of Cambridge who have been tracking Bitcoin mining said recently that China’s share of global Bitcoin mining had fallen to 46 percent in April from 75 percent in late 2019.”[27] “Meanwhile, the United States’ share of mining grew to 16 percent from 4 percent during the same period.”[28] This indicates that mining is not necessarily declining but instead shifting in terms of geographic regions, possibly to an area with an even more troubled grid.[29]

Reducing the demand on the energy grid can be solved by requiring miners to use renewable energy sources, but this would require legislative mandates and implementation of wind and solar energy harvesting on a large (costly) scale.[30] Alternatively, consider XRP. XRP is “an open-source, permissionless, and decentralized blockchain technology… [it] can be sent directly without needing a central intermediary, making it a convenient instrument in bridging two different currencies quickly and efficiently.”[31] XRP’s intrinsically efficient nature makes it a more desirable alternative to Bitcoin and other coins that rely heavily on inefficient blockchain technology.[32] One small catch—Ripple Inc., is being sued by the SEC, so XPR may or may not stick around.[33] However, at the very least, it provides us guidance on how some coins can indeed be energy efficient.[34]

Fossil fuels, carbon emissions, the grid, and cryptocurrency are all inter-connected.[35] Cryptocurrency is here to stay, which means we must ultimately find a way to reduce their inevitable harm on the grid so we can eventually rely on decentralized financial banking alternatives.[36]

[1] Greg Iacurci, 13% of Americans traded crypto in the past year, survey finds, Consumer News & Bus. Channel (July 29, 2021, 10:18AM), https://www.cnbc.com/2021/07/23/13percent-of-americans-traded-crypto-in-the-past-year-survey-finds.html [https://perma.cc/MA54-AKMR].

[2] Jason Brett, Congress Has Introduced 18 Bills on Crypto and Blockchain in 2021, Forbes (Aug. 22, 2021), https://www.forbes.com/sites/jasonbrett/2021/08/22/congress-has-introduced-18-new-bills-on-crypto-and-blockchain-in-2021/?sh=5e7d8701263b [https://perma.cc/J6M6-UQPE].

[3] Nicholas Vega, More than 1 in 3 cryptocurrency investors know little to nothing about it, survey finds, Consumer News & Bus. Channel (Mar. 4, 2021, 9:30 a.m.), https://www.cnbc.com/2021/03/04/survey-finds-one-third-of-crypto-buyers-dont-know-what-theyre-doing.html [https://perma.cc/6EMH-9ABE].

[4] Kiana Danial, What is Cryptocurrency?, dummies, https://www.dummies.com/article/business-careers-money/personal-finance/cryptocurrency/what-is-cryptocurrency-237561#tab2 (last updated Oct. 4, 2020) [https://perma.cc/3P72-7T2N ].

[5] Id.; BlockChian Technology, Pantas & Ting Sutardja Ctr. for Entrepreneurship & Tech. Berkeley Engineering (Oct. 16, 2015), https://scet.berkeley.edu/wp-content/uploads/BlockchainPaper.pdf [https://perma.cc/E25L-VAJQ].

[6] Danial, supra note 4.

[7] John Schmidt, Bitcoin’s Energy Usage, Explained, Forbes: Advisor (June 7, 2021), https://www.forbes.com/advisor/investing/bitcoins-energy-usage-explained/ [https://perma.cc/74AM-WBWW].

[8] Id.; MacKenzie Sigalos, U.S. Officially the Top Destination for Bitcoin Miners, beating out China for the First Time, Consumer News & Bus. Channel (Oct. 13, 2021, 3:10 AM), https://www.cnbc.com/2021/10/13/us-beats-china-as-the-number-one-destination-for-bitcoin-miners.html [https://perma.cc/5NFX-4WU2].

[9] Id.; Danial, supra note 4.; BlockChian Technology, supra note 5.;Climate Impacts & The Power Grid, Climate Nexus, https://climatenexus.org/climate-issues/climate-change-power-grid-blackouts/ [https://perma.cc/L76A-DQFN] (last visited Feb. 1, 2022).; David Hollerith, Why Bitcoin Miners Don’t Use More Renewable Energy, Decrypt (Oct. 4, 2020), https://decrypt.co/43848/why-bitcoin-miners-dont-use-more-renewable-energy [https://perma.cc/X3EJ-ZXQ7].

[10] How Much Does it Cost to Produce Currency and Coin?, Board Governors Fed. Res. Sys., https://www.federalreserve.gov/faqs/currency_12771.htm (last updated Mar. 9, 2021) [https://perma.cc/46EM-58CK].

[11] How Money is Made – Paper and Ink, Bureau Engraving & Printing U.S. Dep’t Treasury https://www.moneyfactory.gov/hmimpaperandink.html#:~:text=The%20ordinary%20paper%20that%20consumers,its%20distinct%20look%20and%20feel (last visited Feb. 4, 20201) [https://perma.cc/Q4L9-GWGZ].; How Long is the Lifespan of U.S. Paper Money, Board Governors Fed. Res. Sys., https://www.federalreserve.gov/faqs/how-long-is-the-life-span-of-us-paper-money.htm (last updated Mar. 9, 2021) [https://perma.cc/5AH3-PRD5].

[12] The Most Eco-Friendly Credit Card Isn’t Plastic, Make Change, https://makechange.aspiration.com/the-most-eco-friendly-credit-card-isnt-plastic/ [https://perma.cc/LBB7-N2Y2] (last visited Jan. 29, 2021).; Make Contactless Payments Using Apple Pay on iPhone, Apple iPhone User Guide https://support.apple.com/guide/iphone/make-contactless-payments-iphbd4cf42b4/ios (last visited Feb. 4, 2021) [https://perma.cc/9VLJ-HZ9N].

[13] The Most Eco-Friendly Credit Card Isn’t Plastic, supra note 13.

[14] Id.

[15] Id.

[16] E. Napoletano & John Schmidt, Decentralized Finance Is Building A New Financial System, Forbes: Advisor, https://www.forbes.com/advisor/investing/defi-decentralized-finance/ (last updated Apr. 2, 2021) [https://perma.cc/J3R6-YQA4].

[17] Jon Huang, Claire O’Neill & Hiroko Tabuchi, Bitcoin Uses More Electricity Than Many Countries. How Is That Possible?, N.Y Times, (Sep. 3, 2021) https://www.nytimes.com/interactive/2021/09/03/climate/bitcoin-carbon-footprint-electricity.html [https://perma.cc/K4LS-65V9].

[18] Id.

[19] Id.

[20] Frank Pallone, Hearing on Cleaning Up Crptocurrency: The Energy Impacts of Blockchains, Committee on Energy & Com. (Jan. 17, 2022), https://energycommerce.house.gov/sites/democrats.energycommerce.house.gov/files/documents/Briefing%20Memo_OI%20Hearing_2022.01.20.pdf [https://perma.cc/T6D4-D68R].

[21] Id.

[22] Ben Geman, House Committee Cites Environmental Toll of Crypto Mining, yahoo! (Jan. 19, 2022), https://www.yahoo.com/now/crypto-climate-scrutiny-u-140017746.html?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAALxT0ODHJuKLsVXry_6C0MANFUGnFYcNQPafeDsmLY1oHk2DX3lgpIAWAlsJDbiiG-C3YTDG1zlzMV6V813SDseYL_g3gq8yT9_5MlRJl10S4CgvZBs8iKEkTExw28lIj7KJE3w1mVQfcYzGkpFpW2wIIQruDRBEyTSlrBjqAG5q [https://perma.cc/R2VC-B7JF].

[23] See Bitcoin Energy Consumption Index, DIGICONOMIST, https://digiconomist.net/bitcoin-energy-consumption/ (last visited Feb. 4, 2021) [https://perma.cc/PD8B-5M4B ].

[24] Id.

[25] Id.

[26] See Huang, O’Neill & Tabuchi, supra note 18.

[27] Id.

[28] Id.

[29] See Id.

[30] Id.

[31] XRP: The Best Digital Asset for Global Payments, Ripple, https://ripple.com/xrp/ [https://perma.cc/DGS9-S6XB] (last visited Jan. 24, 2022).;

[32] See Id.; Popular Cryptocurrencies: Which is the Most Environmentally Friendly?, TFG Un-datactr (May 17, 2021) https://www.trgdatacenters.com/most-environment-friendly-cryptocurrencies/ [https://perma.cc/4R3W-2NZ9].

[33] Press Release, SEC Charges Ripple and Two Executives with Conducting $1.3 Billion Unregistered Securities Offering, U.S Securities & Exchange Commission, (Dec. 22, 2020) https://www.sec.gov/news/press-release/2020-338 [https://perma.cc/5DTY-XHLV].

[34] XRP: The Best Digital Asset for Global Payments, supra note 32.

[35] John Huang, Claire O’Neill, & Hiroko Tabuchi, Bitcoin Uses More Electricity Than Many Countries. How is That Possble?, N.Y. Times (Sept. 3, 2021), https://www.nytimes.com/interactive/2021/09/03/climate/bitcoin-carbon-footprint-electricity.html [https://perma.cc/FX98-PXA6].

[36] Elizabeth Kolbert, Why Bitcoin is Bad for the Environment, The New Yorker (Apr. 22, 2021), https://www.newyorker.com/news/daily-comment/why-bitcoin-is-bad-for-the-environment [https://perma.cc/GJ8T-DQZQ].