More specifically, are cryptocurrencies environmentally friendly or are they a global threat to meeting climate targets as articulated at the recent United Nations Conference of the Parties COP26? Thomson Reuters Institute: In its most basic terms, what is crypto-mining? Joseph Raczynski: The traditional act of mining cryptocurrency is driven by heavy computer processing power as processors race to solve a mathematical problem first, so that the sole winner can add a grouping of transactions to the blockchain.
For example, a transaction could be one person sending another person money via Bitcoin. Computer processing power — which you can tangibly feel as your machine gets warm — means the processor is working very hard to do something. In the Bitcoin example, more than , nodes computer groupings all over the world are competing to win the race, and if they do, they earn 6.
This happens roughly every 10 minutes. Joseph Raczynski of Thomson Reuters Baked into the code is a reduction of the reward over time, and there is a fixed supply of Bitcoin that will ever exist, so the mining becomes likely more difficult over time depending on how many computers are competing at any given moment.
This process is called proof of work and is heavily energy intensive; while another form of mining consensus is proof of stake and is far more efficient. Thomson Reuters Institute: How much does cryptocurrency cost the environment? Joseph Raczynski: This is a very nuanced and politically divisive topic. Having been in this space since , I can see both sides of the debate, and I believe I can distill its reality.
Proof of work is natively inefficient, as it uses lots of electricity to solve that mathematical problem to win the reward. On its face value, this is not environmentally sound. However, crypto-miners intrinsic interest lies in being as electrically efficient as possible because energy consumption is their principal expense after the hardware investment of fast computers and processors, which are also called mining rigs.
Miners seek out the cheapest places in the world to plug their rigs into the electrical grid. They pursue renewables — solar, wind, and hydro power — and have used the blow-off captured from natural gas, which would have been lost or burned as waste. Although the quest for clean energy is increasingly being sought, not all crypto-miners are doing this.
There is little question that proof of work is a cost for the environment, but it is not as catastrophic as some suggest. An intangible effect, of course, is aligning that energy consumption and environmental impact with the benefit that cryptocurrency has created via a vast new industry.
The technology has created an internet of value that we will all leverage, so there is a cost benefit that is being struck as well. Each type of mining produces excess emissions, and impacts electricity and energy consumers. The Industry Keeps Greenwashing Its Poor Practices The proof-of-work cryptocurrency mining community is well aware that its extraordinary energy consumption — and fossil fuel habit — is unattractive when much of the rest of the economy strives to rapidly decarbonize.
In the last year, the industry and its trade organizations have rolled out a series of sustainability claims that are anywhere from outright fiction and greenwashing to no more than hopeful theories, undermined by actual practices.
Most mining facilities draw power from the grid — meaning their electricity is generated by whatever existing energy is in place in the region, or is contracted by their utility. Adding a new large-scale load, like a cryptocurrency mining facility, to the grid generally requires existing fossil generators to increase their output.
Mining facilities located near wind or solar sites do not have a special claim to energy produced by that energy, but instead drive increased emissions from gas and coal plants. There are few mining facilities are actually building new renewable energy to power their operations.
Today, the cryptocurrency mining industry already uses half the electricity of the entire global banking sector while holding a miniscule fraction of the value , and continues to increase. In the United States, the industry has shown little indication of slowing its growth when prices are high. Miners have demonstrated, consistently, from their initial rush to China where coal is a predominant source of electricity to the recent deal between AboutBit and a soon-to-be-retired coal plant in Indiana, that proof-of-work cryptocurrency mining prioritizes the short-term need for large amounts of electricity over longer-term investments in renewable energy.
And unlike other industries where self-imposed, or regulation-based, community standards could result in more sustainable practices, proof-of-work mining is an inherent arms race towards increased energy consumption, until prices no longer support growth. Regulators and Policymakers Can Take Steps to Reduce the Harm of Cryptocurrency Mining State, local, and federal policymakers and regulators can help ensure cryptocurrency mining does not undermine climate or health goals, or adversely impact ratepayers.
The massive energy consumption of cryptocurrency mining threatens to undermine decades of progress towards achieving climate goals, and threatens grids, utilities, communities, and ratepayers. Some jurisdictions have, or are considering, simply banning the practice of mining proof-of-work cryptocurrencies. Shy of a complete moratorium, there are actions that can be taken by state, local, and federal officials to protect energy systems, communities, and ratepayers.
Local and state officials can enforce pollution and noise ordinances, ensure that they are not extending economic development dollars on false promises of long-term jobs or revenue, develop careful zoning codes, and — in the cases where municipalities run the electric utility — develop tariffs that protect existing ratepayers. Utility regulators can influence or bar problematic power purchase agreements, create protective electricity rates or system benefits charges that ensure speculative mining operations do not leave a trail of stranded assets, critically assess utility plans for energy procurement for cryptocurrency mining facilities, and ensure that mining facilities do not increase electricity or capacity costs for existing customers.
Utilities can develop electricity rates that protect against stranded assets, ensure that they do not need to expand power capacity to meet cryptocurrency mining load, and charge rates sufficient to fully protect existing ratepayers from the increased marginal cost of production. Grid operators can develop comprehensive guidance and rules around the interconnection of high-density loads, study the impact of cryptocurrency mining on congestion, resource adequacy, and wholesale market prices, and create rules that minimize the impact of cryptocurrency mining on other customers.
Environmental regulators at all levels should consider affirmative regulation to minimize the local health and environment impacts cryptocurrency mining places on local communities.
INVESTING USING BIBLE CODE
Members of the U-M community are prohibited from using university resources including computing equipment, network services, and electricity for cryptocurrency mining activities outside of faculty-approved research and coursework. Cryptocurrency Mining and Malware Dangers Attackers sometimes use phishing techniques to trick victims into clicking links that load cryptocurrency mining code on their computers.
They may also infect websites with malicious code. The only sign victims may notice is a slowing of their computer's performance. Can leave openings for attackers to exploit. Increases electricity and computing costs. Ties up IT staff who must troubleshoot performance or security issues. Take bitcoin for example, a process known as bitcoin mining has been the root cause for the steep incline in the amount of energy bitcoin specifically uses.
Remember how we said that cryptocurrency is completely decentralized, meaning that computers authorize transactions. Well these transactions are done through bitcoin mining. Specific computers authorize the transaction by solving highly complex mathematical problems in exchange for bitcoins. The highly complex math problems they are solving are done to add a block to blockchains, which we go more in depth in our post about blockchain.
For every block they add to a blockchain, miners get a certain amount of bitcoin in return, which is dependent on the price of bitcoin. Now this is detrimental to our environment because the computation and transaction these computers complete, require an immense amount of electricity and therefore, energy. This energy leaves a carbon footprint in our environment by releasing greenhouse gases.
Electricity generates the second highest amount of carbon emissions, which ultimately leads to furthering the effects of global warming. What can we do to help regulate these detrimental effects? Luckily there are some ways we can help regulate the effects of cryptocurrency. The best and cleanest way is to use renewable energy.
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Cryptocurrency is a term used for various digital currencies which rely on a decentralized system. A decentralized system is where transactions are controlled by a distributed network, not a single person or group. In other words, there is no middle man regulating the transaction.
An example of a middle man is a bank or the internet, which is recently becoming more and more of a centralized system. The decentralized system is the root cause of the negative impacts cryptocurrency has on our environment. How does this affect our environment? Take bitcoin for example, a process known as bitcoin mining has been the root cause for the steep incline in the amount of energy bitcoin specifically uses.
Remember how we said that cryptocurrency is completely decentralized, meaning that computers authorize transactions. Well these transactions are done through bitcoin mining. Specific computers authorize the transaction by solving highly complex mathematical problems in exchange for bitcoins. The highly complex math problems they are solving are done to add a block to blockchains, which we go more in depth in our post about blockchain.
For every block they add to a blockchain, miners get a certain amount of bitcoin in return, which is dependent on the price of bitcoin. This includes use of U-M or personally owned systems using university electrical or networking resources, as well as use of U-M computer equipment. Only faculty-approved research or coursework is exempt from this prohibition.
Cryptocurrency mining may also expose you and your personal devices and accounts to risk. What Is Cryptocurrency Mining? The mining process is computationally intensive and can use significant and costly amounts of computing time and electricity. Members of the U-M community are prohibited from using university resources including computing equipment, network services, and electricity for cryptocurrency mining activities outside of faculty-approved research and coursework.
Cryptocurrency Mining and Malware Dangers Attackers sometimes use phishing techniques to trick victims into clicking links that load cryptocurrency mining code on their computers.
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