Some scams are easy to see, but others might look like a worthwhile investment opportunity. Here are some crypto red flags to look out for.
Why is Bitcoin bad for the environment?
The main impact on the environment from Bitcoin is the energy-heavy process of creating new coins. New tokens are mined using specialised equipment which require an enormous amount of energy to run. It’s estimated that each Bitcoin transaction uses around 2100 kilowatt hours (kWh), which is approximately what an average household in the United States would use in 10 weeks. According to estimations, the annual carbon footprint of Bitcoin is comparable to 97.2 megatonnes of carbon dioxide, which is approximately the annual emissions of the entire country of Argentina.
Reducing the impact of Bitcoin mining
There are a few factors that can contribute to more sustainable, greener Bitcoin mining. Two of these, namely:
- Where the mining takes place (the location), and
- How the energy is sourced.
If Bitcoin mining farms are located in countries that rely on fossil fuels and non-renewable energy sources, the environmental impact of mining in the region is going to be a lot higher than those regions which promote and encourage renewable energy sources such as hydropower, wind power, solar energy or nuclear energy.
The move of Bitcoin mining from China
Recently, a significant number of Bitcoin mining farms were found in China. At these farms, fossil fuels and coal were commonly used because they are cheaper and offer more profit than using renewable energy sources in the region. As a result, the carbon emissions were higher. However, the blanket ban on Bitcoin owing to a national government crack down on all cryptocurrency activity resulted in Chinese-based Bitcoin miners moving to other countries to continue their operations. Many of the miners took to Texas, an energy-conscious region to carry on mining.
Projects and firms that promote green Bitcoin mining
Other crypto-friendly companies have also been working to reduce the environmental cost of Bitcoin mining. One such company, Stronghold Digital Mining (SDIG), a mining firm based in Pennsylvania, is turning waste from old power plants into energy that is being used to power Bitcoin mining rigs. Collecting coal refuse, the company seeks to burn the leftover waste material in an emissions-controlled environment to generate the power needed for the mining equipment to run. Currently, Pennsylvania is the third-largest producer of coal in the United States and SDIG estimates that coal wastage in the region sits at over 220 million tons. SDIG’s operations and system is designed to help reduce both the waste material, disposing of it safely and responsibly, while finding a more sustainable and less carbon-heavy way of generating energy.
Earlier this year, it was reported that ConocoPhillips, an oil drilling company, would be selling the natural gas waste from its operations to Bitcoin miners instead of burning it. This push into the industry, although not conducting mining itself, is part of the company’s initiative to work to mitigate all routine flaring (burning off extra gas) by the year 2030.
In August 2021, United Kingdom-based Bitcoin mining company Argo Blockchain announced that sustainable mining would become a stronger core part of its operations. The mining company’s focus on reducing its carbon emissions set a plan in motion to build a renewable energy-sourced mining farm in Texas. At the time of the announcement, Argo noted:
“Argo is in the process of developing its Helios site in West Texas, planned to commence operation in 2022. It will include 200 MW of electricity consumption coming mostly from renewable power.”