Beware The Cryptocurrency Footprint

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Computer screen listing cryptocurrencies (stock image). Credit: © Colin Cramm / Adobe Stock

Thanks to Science Daily for this summary of Environmental cost of cryptocurrency mines – Monetary price of health and air quality impacts:

Bitcoin, Ethereum, Litecoin and Monero — the names of digital-based ‘cryptocurrencies’ are being heard more and more frequently. But despite having no physical representation, could these new methods of exchange actually be negatively impacting our planet? It’s a question being asked by researchers at The University of New Mexico, who are investigating the environmental impacts of mining cryptocurrencies.

“What is most striking about this research is that it shows that the health and environmental costs of cryptocurrency mining are substantial; larger perhaps than most people realized,” said Benjamin Jones, UNM Researcher and asst. professor of economics.

Cryptocurrency is an internet-based form of exchange that exists solely in the digital world. Its allure comes from using a decentralized peer-to-peer network of exchange, produced and recorded by the entire cryptocurrency community. Independent “miners” compete to solve complex computing algorithms that then provides secure cryptographic validation of an exchange. Miners are rewarded in units of the currency. Digital public ledgers are kept for “blocks” of these transactions, which are combined to create what is called the blockchain. According to proponents, cryptocurrencies do not need a third party, or traditional bank, or centralized government control to provide secure validation for transactions. In addition, cryptocurrencies are typically designed to limit production after a point, meaning the total amount in circulation eventually hits a cap. These caps and ledgers are maintained through the systems of users .

But the mechanisms that make these currencies so appealing are also using exorbitant amounts of energy.

In a new paper titled ‘Cryptodamages: Monetary value estimates of the air pollution and human health impacts of cryptocurrency mining’ published in the journal, Energy Research & Social Science, University of New Mexico researchers Andrew Goodkind (asst. professor, Economics), Benjamin Jones (asst. professor, Economics) and Robert Berrens (professor, Economics) estimate the environmental impact of these cryptocurrency mining techniques. Using existing data that assessed energy use on cryptocurrency, and a battery of economic valuation techniques, the three were able to put a monetary figure on the mining practices.

“Our expertise is in estimating the monetary damages, due to health and environmental impacts, of different economics activities and sectors,” Berrens explained. “For example, it is common for economists to study the impacts from energy use connected to production and consumption patterns in agriculture, or with automobile production and use. In a world confronting climate change, economists can help us understand the impacts connected to different activities and technologies.”

The independent production, or ‘mining’, practices of cryptocurrencies are done using energy-consuming specialized computer hardware and can take place in any geographic location. Large-scale operations, called mining camps, are now congregating around the fastest internet connections and cheapest energy sources — regardless of whether the energy is green or not.

“With each cryptocurrency, the rising electricity requirements to produce a single coin can lead to an almost inevitable cliff of negative net social benefit,” the paper states.

Read the whole story here.

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