Effects of cryptocurrencies on the environment


Photo courtesy to Pixabay

For months, news of crypto currency, blockchain and NFTs have spread through the media like wildfire. The significance of these terms have gained big traction lately — but why?

In essence, cryptocurrency is a form of money that is all managed virtually. In order to transact it, cryptocurrency is secured through cryptosecurity, or complex computer algorithms that protect users and the transfer of said cryptocurrency. Blockchain is a different type of cryptosecurity and acts more like a “virtual footprint,” or a record of the transactions. It remains a key tool to prevent the transfer of currency from being hacked or cheated. Blockchain functions by creating “blocks” of data every time new data is collected. It is powered by warehouses of computers running together at once, making sure that the cryptocurrency’s transaction data is recorded and stored at all times. Finally, NFTs, or Non-Fungible Tokens, are units of data that can be sold. Oftentimes, NFTs are similar to when original paintings made by famous artists are auctioned and sold as an original. Recently, these terms have become increasingly popular as celebrities, millionaires and data scientists analyze and involve themselves in the world of digital currency and NFTs. However, these digital currencies and technology have had evident impacts on the environment. 

These forms of digital currencies impact the environment by having a huge carbon footprint: they require a lot of energy and power. According to The Verge, individual pieces of crypto art on non-fungible tokens (NFTs) are at least partially responsible for the millions of tons of planet-heating carbon dioxide emissions generated by the machinery used to buy and sell them. Furthermore, these digital currencies also prevent the growth of renewable energy by using fossil fuels cheaply. In theory, all mining energy could come from renewable sources, but right now there is money to be made by converting cheap fossil fuels into valuable cryptocurrencies, states a TIME magazine article. Essentially, in order to transact payments, lots of computers use up tons and tons of energy trying to solve complex problems and puzzles.

The presence of NFTs in pop culture is increasing as celebrities begin to create their own. Short highlights of NBA and WNBA players called Top Shots are being sold as collectable moments, and since NFTs release in 2021, they have created a craze. Celebrities such as Steph Curry, Justin Beiber, Snoop Dog and BTS have entered the world of NFTs. However, there is backlash: the Kpop group came under fire for diving into the world of NFTs despite their drastic environmental impacts. One of the first popularized NFTs was the iconic Nyan Cat which is sold on average for about $2750.

Although various forms of cryptocurriences can be attractive to consumers, its environmental impact is something that should always be considered.