The Future of Crypto Mining must be Green!
The digitisation era has transformed various sectors of the economy on a global scale. From resource extraction and manufacturing to retail and hospitality, the leveraging of technologies and the rapid emergence of innovative tools have led to unprecedented increases in productivity, improved resource accessibility, and created millions of jobs across the world.
The financial sector is no stranger to digitization. Fintech (financial technology) has spurred the development of digital assets analogous to the use of conventional liquid assets such as notes and coins and goes beyond the use of technology for e-banking services. The boom caused a decentralized algorithm generated currency enabled by blockchain technology, known as crypto-currencies – crypto for short, which has redefined the future of the finance world. Like natural resources, cryptos need to be ‘mined’ to enter circulation in the economy. This is done using supercomputers that solve algorithms that verify crypto transactions and rewarding miners with a small fraction worth a certain value for each verification.
The often-abysmal fraction of crypto is sufficient to heavily incentivize miners to maximize this practice. Thus, miners will often recruit the aid of hundreds if not thousands of computers to construct a crypto ‘mine’, validating hundreds of thousands of transactions a day. One of the main issues arises from the operation and maintenance of the supercomputers housed in these mines. The energy consumed by these mines is divided across two sources: powering the processors and using fans to effectively cool them. To contextualize this energy consumption, it is estimated by the Cambridge Bitcoin Electricity Consumption Index that Bitcoin – the most popular crypto currency – mining alone consumes an average annual quantity of 126.67 TWh, comparable to the 131.43 TWh consumed by the United Arab Emirates in 2019.