Mid-Year Intake. Applications for mid-year intake are now closed.

How crypto mining has had a major impact on the climate crisis

How crypto mining has had a major impact on the climate crisis

With the increase of investors and cryptocurrency taking off, more and more people are finding it better to start mining their own cryptocurrency through online platforms using various types of software. To better understand what cryptocurrency is and how it works, you can read our previous article here.

Crypto mining has however attracted some negative publicity recently as several issues have emerged focused on how digital mining is performed and the impact that this activity has on the environment.

Bitcoin

Bitcoin mining as a whole presents great opportunities and earning potential for investors. Similar to the ways in which some envision flying family cars for the future, many see the world moving to a digital currency age within the next decade. So, who can really blame investors for putting up shop and looking to expand their earning potential through mining? On the flip side, it’s known that if something uses electricity, especially in the present where renewable energy sources are not being optimised globally yet, the noise pollution of the heavy machinery, the huge amounts of electricity and the non-stop running of hundreds of computers can really have a negative impact on the environment. CBS reports that a once dormant industrial plant has now been turned into an energy plant simply to supply the electricity consumption of the crypto-mine that also exists on the plant.

How much electricity does crypto-mining use?

How Stuff Works reports that: “The problem, critics say, is that all those calculations needed to solve the equations for mining cumulatively consume large amounts of electricity. Bitcoin already uses 149.63 terawatt-hours annually, more than entire countries such as Malaysia and Sweden, according to the Cambridge Bitcoin Electricity Consumption Index. Microsoft co-founder and global philanthropist Bill Gates recently told journalist Andrew Ross Sorkin that bitcoin “uses more energy per transaction than any other method known to mankind.”

Cambridge Bitcoin Electricity Consumption

The amount of electricity produced by the burning of gas and coal, which contributes to climate change, is difficult to determine. Due to the fact that two-thirds of the global electricity is generated by plants that burn fossil fuels, it is easy to see how some cryptocurrencies could be contributing to climate change. Nature Climate published a journal in 2018 and the study came to the conclusion that the growth of cryptocurrency and crypto-mining could produce enough emissions by itself to raise global temperatures by 2 degrees celsius within the next 15 years (read more about it here).

cryptocurrency and crypto-mining

In a report compiled by Live Mint earlier this year, it was revealed that crypto-mining and in particular, bitcoin mining consumes an “estimate of around 115 TWh per year”. According to an analysis conducted by the platform, the Bitcoin network could consume the same amount of energy as all data centres around the world, and not only that, but its carbon footprint could also be comparable to London’s.

Bitcoin Electricity Consumption Index Chart

Conclusion

While cryptocurrency continues to grow in success as one of the greatest and newest forms of currency in our lifetime, the impending environmental impact will undoubtedly have negative implications for the future. In order to combat this, crypto-miners and crypto-creators should really seek alternative avenues into sourcing energy supply for their crypto-mining to lessen the excessive stress an at-home or industrial-sized crypto-mining plant place on any power grid that is supplied through non-renewable energies.

industrial-sized crypto-mining

What’s all the crypto hype about?

cryptocurrency - IMM Blog Image

Cryptocurrency has taken the world by storm. In South Africa alone, many have been scouring the internet, trying to understand what this “bitcoin-crypto” thing is and a quick analysis of Google trends shows this quite well. People are excited. They are intrigued. But, are there any good reasons for this reaction and is it worth all the hype surrounding it? See for yourself…

What is cryptocurrency

What is cryptocurrency?

The world of cryptocurrency, and its community by association, are notorious for its jargon, and this poses a barrier for people who are interested in getting to understand it but are relatively new to the space and idea of crypto. Key definitions (as defined by Luno.com) to keep in mind are cryptocurrency, cryptography and blockchain.

  • Cryptocurrency: A digital currency that relies on cryptography to verify its transactions.

A digital currency - IMM Blog Image

  • Cryptography: The practice and study of techniques for secure communication in the presence of third parties called adversaries. In the context of cryptocurrency, cryptography validates and secures transaction information.
  • Blockchain: A decentralised network that records transactions, much like a traditional ledger. These transactions can be any movement of currency, goods or secure data.

What is the Blockchain and how does it work?

The blockchain is thus the “collective” ledger of which every computer connected to the network has a copy of, and which processes, encrypts and stores all the data transactions simultaneously across every connected node (read more about that here). According to Forbes, Blockchain experts and enthusiasts, this prevents any tampering with the system and prevents cheating or stealing as the ledger is decentralised, which makes for more user oversight and transparency.

Blockchain - IMM BLog Image

  • Distributed Ledger: A large database that is consensually shared and synchronised across multiple sites, institutions or geographies. It allows transactions to have public “witnesses”, thereby making a cyberattack more difficult.

Distributed Ledger - IMM Blog Image

Where does crypto come from?

Satoshi Nakamoto

According to Investopedia, Bitcoin is the first cryptocurrency. The first recorded cryptocurrency transaction was for a pizza purchase on the 22nd of May, 2010. However, long before this, on the 3rd of January 2009, the infamous Satoshi Nakomoto “mined” the genesis block on the Bitcoin Blockchain and the rest, as they say, is history.

Where does crypto come from

How do you trade crypto and how does it work?

Globally, the most famous and used cryptocurrency exchange has to be Binance, it being a noticed benchmark for other exchanges to emulate. A lot, if not most crypto trade goes through Binance. In South Africa, since Binance doesn’t have a straight ZAR to crypto function, companies like Luno have sprung up in order to close that gap in the market, creating a spade for new and experienced traders and enthusiasts to trade and buy cryptocurrency.

trade crypto

What has been the response?

The technology is influencing and its popularity has spread like wildfire, some comparing it to the dot com bubble of the late ’80s and 90’s, where almost everyone had some investment on the then-new internet. According to Fortune.com, countries like Cuba and El Salvador have accepted it as a legal form of trade, giving it more legitimacy, while other countries like China have cracked down on everything to do with it, not trusting it at all,  giving it some illegitimacy too.

Conclusion

Crypto was developed as a means to an end to the financial crash in 2008. Nakomoto, whether one person or a group under a pseudonym, published a paper outlining a new form of monetary exchange which, he hoped, would cut out the banks and the state entirely, and which was run and protected by the best cryptography technology available at the time. Thus, out of the ashes of one of the biggest global financial innovations in history, a new sun was about to rise, which would revolutionise the imagination of how a monetary system could work.

Whether or not crypto is worth the hype is still up for debate but what is not debatable is the numbers that are trading on the exchange – investing in crypto whether you’re in the first or second camp is highly rewarding at this point in time and it is not going anywhere anytime soon.

Crypto Conclusion 2