Environmental Concern of Using Cryptocurrencies
In the past few years, cryptocurrencies have rapidly grown. Bitcoin is the first cryptocurrency and currently receive the most popularity in cryptocurrency market. This business opportunity attracted investors into the market. There are many types of investment in cryptocurrency such as investment in exchanging market of cryptocurrencies and investment in cryptocurrencies mining which seems to be the lower cost investment of cryptocurrency. Cryptocurrency mining is the same meaning as the mining of valuable minerals but computer system is applied for cryptocurrency mining. Although there is risk in volatility of cryptocurrencies value, benefits of the investment is worth for investors. The incentive of cryptocurrencies investment leads to the investment in cryptocurrencies mining which refers to the process of earning the cryptocurrencies by using thousands to ten thousands computers with cooling system. Tesla, a global technology company that creates a revolution of vehicle industry and have been focusing on clean technology development, revealed in February 2021 that it invested in cryptocurrency, bitcoin in particular, for $1.5 billion and the company would accept Bitcoin as a legal payment option. However, Tesla founder Elon Musk then said on 13 May 2021 via Twitter that “Tesla has suspended vehicle purchases using Bitcoin” since he concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions.
According to Cambridge researchers, energy consumption of bitcoin mining is currently around 110 Terawatt Hour per year which is roughly 0.55 percent of global energy consumption and bitcoin is using more energy than the annual consumption of countries such as Argentina as shown in Figure 1. Bill Gates, a founder of Microsoft, also mentioned about the energy consumption of the cryptocurrency that “Bitcoin uses more electricity per transaction than any other method known to mankind.”
In addition, this is just the genesis of the mainstream crypto-craze, the energy consumption of cryptocurrencies mining is going to increase and could further exacerbate climate change. Therefore, in order to balance energy consumption of cryptocurrencies and its environmental impact, new technology for reducing energy consumption of cryptocurrencies mining should be initiated along with the introduction of policy or measure on cryptocurrencies.