In recent times, you have probably heard a lot about digital currencies. Multiple cryptocurrency exchanges offer to buy crypto, attracting with the chart showing the rate Bitcoin to Dollar. People are discussing whether cryptocurrency is a good investment, or whether it may appear to be a bubble going to burst as compared to the Tulipmania of the 17th century.
Cryptocurrencies, like Bitcoin (BTC) and Ether (ETH), have seen significant price growth and user engagement, however, there are concerns about the long-term effects of pervasive cryptocurrency adoption. Many critics and environmental activists, in particular, have raised questions about the energy usage of digital currency mining, which may lead to an increase in carbon emissions of greenhouse gases, consequently resulting in climate change.
New York power plants
Recently mining activities have taken place in tiny upstate towns such as Dresden and Alcoa. Financiers hungry for Bitcoin have converted old power plants that torment these towns with crypto mining operations. In certain scenarios, the plants deliver some electricity to the system when using the remainder to supply their mining operations. They’ve been profitable for the factory’s new owners.
Namely, Dresden’s Greenidge power station launched a campaign to significantly expand its operation with four new buildings, each designed to accommodate nothing but the servers appropriate for this type of mining, expanded wall to wall. The proprietors aspire to double the plant’s efficiency by the end of the year and improve it to 500 megawatts by 2025.
In 2020, the power plant in Dresden, New York, was mining approximately 5.5 bitcoins per day. Greenidge Generation Holdings, the plant’s parent company, is anticipated to go global this year through a merger deal in the United States.
This made the government focused on the digital currency impact on the environment.
Without delay, New York state legislators investigated that the amount of carbon dioxide issued due to the Bitcoin mining surpasses drastically all allowable emission rates. What is Bitcoin mining? How it proceeds? Is it harmful to the environment and population? Read on to find all the answers.
Bitcoin has had a significant effect on energy usage. Its consensus algorithm is based on a practice known as proof of work, in which miners contend for the opportunity to add transactions in a block on the chain. They compete to resolve complex mathematical problems in order to do so. The Bitcoin protocol aims to limit block generation to once every ten minutes. To accomplish this, it must make the mathematical problem more complicated as more miners join the network, increasing computing power. As Bitcoin becomes more popular, proof of work makes the total processing power on the network increase.
Even though the core Bitcoin developers appear to be devoted to the proof of work, the competing network Ethereum, which offers ample functionality, is gearing up to switch to a proof-of-stake mechanism. This method replaces miners with validators. It significantly helps minimize energy consumption when compared to proof of work.
Bitcoin mining impact on the environment
Bitcoin mining has drawn the New York government’s attention due to the massive carbon emissions associated with the use of electricity to power operational activities running 24 hours a day, seven days a week. According to Digiconomist, the global mining footprint is around 53 megatons of CO2 per year, which would be equal to all of Sweden’s emissions. As for now, it takes 1138 kWh of energy to process a single bitcoin transaction, which is equivalent to the energy needed to run a single US household for 39 days (According to the Bitcoin Energy Consumption Index). Upstate New York has recently become a major source of mining operations.
New measures taken by the legislative
New York state legislators have introduced the law that would prohibit cryptocurrency mining activities for three following years.
Bill S6486 aims to halt the centers assuring the process of mining digital currency until the investigation of the ecological impact is completed. The analysis would have to showcase that mining centers would not have an impact on the country’s carbon emissions targets.
The bill states: “Virtual currency mining centers represent an industry that expands in the State of New York. Often, they are located in abandoned or transformed fossil fuel power stations, along with inactive power stations”.
The aims of the NY government
Climate Leadership and Community Protection Act issued by the state is aimed at environmental purification. Thus, the government expects that New York will downgrade in CO2 emissions over 1990 levels by 2030. By 2050, that figure should have achieved 85 percent, with net-zero emissions in all sectors of the economy.
In addition, it’s mentioned in the new bill that in case crypto mining operations continue, they will augment the energy consumption level causing a greenhouse effect. This will breach Climate Leadership and Community Protection Act.
The legislation is applicable to both current and planned mining operations. The review would include an analysis of any negative effects on water, air quality, or wildlife, in addition to a cumulative impact assessment on greenhouse gas emissions.
What is more, citizens could leave their comments on the situation during 120 days. The feedbacks will be included in the total review.
What to expect?
The initiatives are in their beginning phases, and the bill has only recently been sent to the environment committee of the United States Senate.
It happened at a time when a handful of countries around the world are weighing up the impact of Bitcoin mining.
China’s Inner Mongolia region, which was home to one of the world’s largest BTC mining hubs, officially unveiled the decision to close existing operations and prohibit new projects from launching.
Nevertheless, experts warned that this could lead to mining operations going in shadow in order to avoid detection by officials. Although Elon Musk, CEO of Tesla, and Jack Dorsey, CEO of Twitter, have argued that Bitcoin enhances renewable energy development, the problem right now is that it is hard to determine the number of mining operations that are environmentally friendly.