CRYPTO’S GREEN FUTURE

Cryptocurrency has a bit of an image problem – and not in the way most people expect. Potential conmen and market volatility aside, there’s an intrinsic issue with mining the stuff that is at odds with not only how we think of crypto, but many societal values in general: sustainability.

Let’s start with one of the first travel companies in the world to declare a climate emergency, Exodus Travels. They have since crafted their Planet Promise climate action plan which includes halving their carbon footprint by 2030 and rewilding 100 square metres of land per passenger through the Nature and Carbon Corridors scheme. At first glance, that sounds crazy. How can something that’s nonphysical impact the environment in any meaningful way? Well, the issue isn’t the various Bitcoins, Ethereums and Dogecoins themselves but in how they’re acquired.

In basic terms, mining happens when a computer run a series of complicated algorithms, from which miners receive tokens, or coins, showing ‘proof-ofwork’. At first, this is easy to do, but as more blocks are generated, it gets exponentially harder to generate more.

On the one hand, this should, in theory, keep inflation down for the various currencies based on blockchain technology: you can’t just print a load more of the stuff. On the other, it means that more and more computing power – and therefore energy – needs to go into it.

And there’s already a lot of power going into crypto mining. Think huge blocks of servers, all dedicated to mining, all consuming vast amounts of power. The more they mine, the more servers are needed, the more power is consumed.

Right now, the Bitcoin network alone is thought to consume more energy than the Netherlands. Combined with Ethereum, make it Thailand. No wonder Greenpeace no longer accept them.

What might surprise you however is that it’s not just the actual mining that needs power. Exchanging cryptocurrency does, too. Verifying a transaction costs, on average, 980 kWh, about three months of power for an average home in London. Your average card payment uses 0.0006 kWh.

Fortunately, there are some in the industry that would prefer the planet not burst into flames and, while Microstrategy CEO Michael Saylor and Tesla

C U R R E N C Y C R Y P T O The Green Future of Words: Sam Kessler

CEO Elon Musk’s Bitcoin Mining Council is an interesting (if vague) proposition, perhaps more salient is the Crypto Climate Accord. Started back in April by the Energy Web Foundation, Rocky Mountain Institute and Alliance for Innovative Regulations the Accord aims to achieve net-zero emissions for the entire industry by 2030.

A good part of that is first calculating exactly how much energy is being used across the sector: more finding a way of regulating and holding accountable the various crypto companies dotted across the world. It’s a bold aim, so reassuring that there’s been huge support from hundreds of crypto companies around the world.

Still, when it comes to the physical costs of digital mining, firms need to start thinking of new power

The Bitcoin network alone is thought to consume more energy than the Netherlands. Combined with Ethereum, make it Thailand

solutions. Bitcoin mining firm Compass has certainly been thinking about it. While their immense energy needs can’t be met by a few turbines, they’ve gone for the next best thing and signed a deal with nuclear reactor company Oklo, which will supply them with 10 megawatts of energy. That’s enough to power up to 9,000 homes a year.

As an energy source, nuclear fission makes a lot of sense. It’s efficient, cleaner than fossil fuels and, if Oklo have their way, will be booming by 2023, despite its complexity and high set-up costs. And Compass isn’t the only one that sees it. A handful of power companies – Energy Harbor Corp., Talen Energy, et al – are going the other way and adding bitcoin operations to their plants to use up any excess energy production.

Of course, the nuclear option is just one of many eco-friendly initiatives coming to crypto. Bitfarms for example is a hydro-powered blockchain infrastructure company, while HIVE operates out of the renewable-rich regions of Canada, Sweden and Iceland. Whether they can scale up to meet demand in the future remains to be seen, but at least for now they’re entirely green options.

All of these though, however green and wholesome they are, are in a way stopgaps. Instead, it’s crypto itself that needs to change – and as of 2022, Ethereum, the second largest offender after Bitcoin, will be leading the charge.

In Ethereum 2.0, the crypto will be migrating from the old ‘proof-of-work’ concept to what they’re calling ‘proof-of-stake’. The latter essentially cuts out the advanced mathematics that necessitate server banks the size of Harrods and instead has crypto owners put their own tokens up as collateral to validate the currency.

To put it in a clearer way, proof-of-work uses complex algorithms to prove they’re real while proof-of-stake has the owners do it.

This change will mean that Ethereum becomes less secure at a base level than it used to be, and will require other methods to plug security holes. It will however cut energy costs by up to 99.95%, which is both fantastic for the environment and anyone that wants to get involved without plumping for one of Oklo’s nuclear fission reactors.

So yes, there has been a lot of attention around the environmental impact of cryptocurrency in the last years, and for good reason. It’s genuinely mindboggling to see the numbers. But this is an industry started by innovative entrepreneurs and if any can get itself out of trouble, it’s crypto.

Between switching to green energy, holding miners accountable for their consumption and perhaps changing the technology powering the whole thing, crypto might just be the financial future we were promised.

Bitcoin is already starting to adapt to a greener future, using less electricity to fulfill its customer needs