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Can crypto be more environmentally sustainable?

Bitcoin's annual carbon emissions are equivalent to Argentina — and some crypto creators are eyeing a more sustainable future.

Why? The distributed network that makes Bitcoin secure also consumes significant energy to validate transactions and mine the cryptocurrency. Bitcoin’s “proof of work” algorithm — known as mining — entails members of a network compute math puzzles that prevent others from cheating the system.

The cost: The Bitcoin Energy Consumption Index estimates a single Bitcoin transaction uses enough electricity — 985-kilowatt hours — to power a U.S. household for nearly 34 days.

Carbon conundrum: As Bitcoin’s price has skyrocketed, so has its energy consumption. Energy use from Bitcoin transactions has increased 83 percent in the last year, per the Digiconomist. In just the last two months, Digiconomist estimates Bitcoin’s energy use has jumped 33 percent.

Value begets competition: Charles Hoskinson, a co-founder of Ethereum, said Bitcoin’s quadrupling of value in the last year has created more revenue for miners, spurring more competition to mine.

“The more successful Bitcoin gets, the higher the price goes; the higher the price goes, the more competition for Bitcoin; and thus the more energy is expended to mine.” —Charles Hoskinson to CNBC

Coal-powered crypto: The Cambridge Center for Alternative Finance notes that nearly half of all Bitcoin mining operations are located in China, which relies heavily on coal power. Cambridge estimates that coal powers about 38 percent of Bitcoin miners.

Eco alternatives: Bitcoin gave birth to the blockchain but the concept has evolved into other, more energy-efficient cryptocurrencies.

  • Nano ($NANO, $8.60 a coin) has cut mining operations entirely and instead uses a consensus mechanism called Open Representative Voting, which draws minimal energy. For each transaction, Nano says it uses about 0.0001 kWh as compared to Bitcoin’s 985 KWh or Ethereum’s 62.5 KWh.

  • Cardano ($ADA, $1.23 a coin) created the Ouroboros, a blockchain protocol based on peer-reviewed research that’s more energy-efficient. Cardano says its network consumes about 6 GWh of power per year — roughly four million times more efficient than Bitcoin.

  • Ripple ($XRP, $1.32 a coin) is facing heat from the SEC, but was designed with sustainability in mind. Ripple has eliminated mining and uses a consensus procedure to validate and execute orders. The company says its network is 57,000x more energy-efficient than Bitcoin. 100 billion Ripple have been pre-mined and 45 billion are in circulation — Ripple periodically releases the rest.

Counterarguments: Meltem Demirors, chief strategy officer of the digital asset management firm CoinShares, argues that emails also use electricity but it is not criticized in the same way. Banks and stock exchanges also draw significant power but aren’t held to the same scrutiny.

“What we have here is people trying to decide what is or is not a good use of energy, and Bitcoin is incredibly transparent in its energy use while other industries are much more opaque.” —Meltem Demirors to CNBC


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Energy policy vs. crypto costs: The CATO Institute, a Libertarian think tank founded by Charles Koch, argues that claims of cryptocurrencies’ causing environmental harm are exaggerated. CATO researcher Diego Zuluaga maintains that the environmental impact of Bitcoin is a function not of the technology but of the countries’ energy policies in which miners operate.

“There is no evidence that cryptocurrencies have environmental externalities beyond those that can be ascribed to any electricity user wherever electricity is inefficiently priced. But public policy, not cryptocurrency innovation, is at fault there.” —Diego Zuluaga

Unused electronics dwarfs crypto: While crypto’s energy bill is growing, Americans’ idle electronics are more of an environmental issue than the Bitcoin network. The amount of electricity consumed in the U.S. every year by always-on but inactive devices like laptop chargers and microwaves could power the Bitcoin network for nearly two years, according to Cambridge University.

What do you think? Please share your thoughts below.

  1. 2

    Great topic. Tezos solution is my fav sustainable coin. They have the PoS Ethereum wishes for and have been creating NFTs at a 1/2000000th the ETH energy cost: https://medium.com/tqtezos/clean-nfts-on-tezos-58566b2fdba1

    About emails, as DHH said this morning, we've been trained by Google to not delete emails (cause more data for them), which led us to keeping useless notifications, ads, etc. This is also are an issue!

    1. 1

      That's awesome! Going to check this coin out too. Thanks for sharing!

  2. 2

    There’s also Chia https://www.chia.net/ as an eco alternative from one of the founders of Bit Torrent. There was a great Kevin Rose podcast with them. If I remember rightly they use a ‘proof of storage’ instead of ‘proof of work’ concept, as well as some other stuff to even the playing field between miners.

    1. 1

      Nice thank you for sharing! I've not heard of it but will check it out and that podcast.

  3. 2

    Ouch, that's crazy! Lucky crypto is pretty niche at the moment. I heard about the environmental impact, but had no idea 1 transaction = household energy for over a month!

  4. 1

    I just happened to browse over and see this after writing my most recent article just about this topic. It's a short "fiction" piece. Check it out! https://riptidedata.medium.com/the-inevitable-heat-death-of-the-world-d796840be304

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