The process of “mining” cryptocurrencies is so energy intensive that it poses a threat to the global agreement to mitigate greenhouse gas emissions.
In a study published in Energy Research & Social Science, John Truby, associate professor of law and director of the Center for Law & Development at Qatar University, said the Paris Agreement is under threat due to the growing energy consumption of mining cryptocurrencies.
“Despite digital currencies providing considerable potential transactional, security, and financial access benefits, the design of bitcoin’s mining and trading system requires such a vast consumption of electricity that it is equivalent to powering Denmark. This threatens the planet to the extent that intervention is necessary to prevent similar models emerging,” wrote Truby.
According to the Bitcoin Energy Consumption Index, annual electricity consumption stands at 73.12 TWh, a near 400% increase over the past 12 months, and according to the study, the process involved in a single bitcoin
transaction could provide electricity for a home in Britain for an entire month.
So what can be done?
Government intervention is a possibility, Truby argued, saying that while intervention in a free market is contentious, the need to avert environmental harm could justify it when applying 19th century philosopher John Stuart Mill’s utilitarian justification for intervention. “The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others,” Mill famously said.
The decentralized nature of the technology could complicate the prospect of government intervention. However, the agreement between 179 parties in the Paris agreement calls for a focus on what can be done, Truby said.
“Furthermore, the [Paris] Agreement mentions numerous times that technology should be utilized to achieve greenhouse gas mitigation, whereas a highly polluting use of technology would very much go against the spirit of the agreement, if not the commitments made,” wrote Truby.
Another solution could be a change in how bitcoin transactions are confirmed.
Currently, bitcoin uses a proof-of-work concept, where miners are rewarded by solving puzzles to validate a transaction, which is heavily energy intensive. Another method of verifying and confirming digital currency transactions is proof-of-stake. Under this protocol, the creator of a new block is predetermined and is rewarded a transaction fee, not a block, which requires much less energy.
Whatever route the crypto community goes, Truby said the dialogue should not focus on disputing the technology, but trying to alleviate the environmental issues it poses.
“As the underlying technology can offer significant benefits, it is here to stay, so future models must be designed without reliance on energy consumption so disproportionate to their economic or social benefits.”
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