Once again under fire for their environmental impact, crypto’s constantly rising popularity has Pointed a finger straight at Wall Street investors supporting the sector, a new Greenpeace analysis questions the energy use of Bitcoin mining.
Wall Street’s Dirty Little Secret?
According to the paper, the environmental effect of Bitcoin mining is closely entwined with conventional financial organisations. Although Bitcoin itself runs on a distributed network, Wall Street behemoths fund and support the enormous mining facilities needed to guard the money.
The report notes that the sector mostly depends on banks, asset managers, and venture capitalists for the capital it requires to operate, notwithstanding the myth of Bitcoin being free from conventional finance.
Source: Greenpeace
Greenpeace identifies several major financial institutions, including BlackRock and Vanguard, as being top financiers of Bitcoin mining companies in 2022. The report calculates that these institutions, along with others, are indirectly responsible for over 1.7 million metric tons of CO2 emissions – equivalent to the annual electricity use of hundreds of thousands of homes.
Source: Greenpeace
Is Proof-Of-Work The Problem?
The essence of the environmental issue is found in Proof-of- Work (PoW) technology of Bitcoin. This method uses a large computer network to validate transactions and network security by means of intricate mathematical puzzle solving. The network gets more secure the more computer capability allocated to it; but, this also results in a great demand for electricity.
Greenpeace contends that in the context of climate change the PoW system is just unsustainable. They suggest a change to other consensus systems, such Proof-of- Stake, which run much less dependent on energy.
Total crypto market cap at $2.30 trillion on the daily chart: TradingView.com
Some business analysts, meanwhile, warn against a quick change. Over the years, proof-of-work has shown to be rather safe for Bitcoin. Changing to another system could bring fresh weaknesses we never would have thought about yet.
Finding A Sustainable Future: Can Crypto Go Green?
The argument on Bitcoin’s environmental effect is far from resolved. Although Greenpeace brings legitimate issues regarding Wall Street’s involvement and the inherent energy inefficiencies of PoW, additional elements should be taken into account.
Certain Bitcoin mining operations are looking more and more on solar and geothermal energy sources. In addition, studies are under progress on strategies to maximise the PoW system to lower its energy use.
A few important decisions will define Bitcoin’s fate. Financial groups and miners ought to disclose more about their energy consumption. One should investigate alternative mining techniques and control energy sources. Making sure Bitcoin can expand without negative effects on the surroundings is the major obstacle.
Featured image from Greenpeace, chart from TradingView