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Climate paper says Bitcoin mining is putting vulnerable nations at risk

A new climate paper suggests that the carbon footprint of cryptocurrency is on the rise. Putting already vulnerable nations at further risk, experts are now calling for a global ban to ‘proof of work’ transactions.

We’re slowly getting our heads around the confusing and ever-changing world of cryptocurrency.

Putting aside the burgeoning realm of NFTs and on the fly investing for now though, it’s become one of the worst kept secrets that cryptocurrency is having a hefty impact on the climate.

We’ve previously written about just how energy hungry these decentralised systems are, using supercomputers to complete transactions on one continuous digital blockchain. Often times, their annual carbon tolls will match that of entire developing countries.

One of a seemingly infinite iterations of digital coins – and far and away the most popular – is Bitcoin. While its value has a propensity to change by thousands of dollars minute to minute, since the financial crisis of 2008 it has grown exponentially in users (or miners) every year.

The digital infrastructure behind this coin has actually surpassed the carbon footprint of the literal gold mining industry, rising from 22 megatons of CO2 in 2019 to 90 megatons in 2021. There are more smartphones than sticks of dynamite, apparently.

Concerned that the sector is still too unregulated, climate experts at Northumbria University Peter Howson and Alex de Vries are now calling for change. Specifically, their new paper aims to raise awareness about those ‘on the frontline of climate change’ and how they’re being impacted by technology they don’t even use.

The number of people dabbling in Bitcoin is around the same population as the city of Jakarta and less than 1 percent of the planet. ‘If we were all using this technology, then perhaps you could justify such a massive carbon footprint,’ he says.

Comparing crypto to other modern financial systems, he likened the situation to a ‘steam engine when we have Teslas.’ Ironic, given the company’s chief is something of a cult leader for Doge buffs.

Lamenting what they describe as ‘crypto colonialism,’ the pair suggest that every dollar Bitcoin generates would need to be offset by $0.49 to get anywhere close to remedying public health issues linked to the climate.

Speaking also on the socio-economic aspect, they revealed that nefarious groups of crypto miners directly lean towards conflict areas to hoard already scarce financial resources. ‘We can think of these in the same way as we think of conflict diamonds,’ said Peter.

Given that financing for developing nations played such a key part in COP26 negotiations, crypto analysts and environmentalists are demanding that policymakers coordinate to clean up the sector.

China recently made cryptocurrency transactions illegal as part of its clean energy goals, but mining has since shifted to the neighbouring country of Kazakhstan. Wanting to avoid a similar outcome across other regions when they inevitably address the issue, the paper calls for a global ban to ‘proof of work’ systems.

This means that dedicated supercomputers running crypto blockchains would be turned off and some form of third-party agency would likely come into place. ‘Proof of stake’ is regularly offered up as a strong alternative, as it uses equity stakes to create blocks on a blockchain and not constantly running algorithms.

The likes of Sweden and Norway have been looking to axe ‘proof of work’ for some time, but experts are calling for wider unity under the umbrella of our 1.5C goal.

‘Having reviewed all of the different policy options, a global coordinated ban on proof of work cryptocurrency is really the only means by which we can rein it [both economic and climate damage] in on a decent sort of timescale.’

 

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