Environmental Impact of Crypto Mining

Those bullish about cryptocurrency say it’s the future of currency, and it will disrupt the banking system as we know it and decentralize finance. Regardless of where you stand on the future of cryptocurrency, though, at present, there’s no debate that it has a monumental impact on the environment. 

The excitement surrounding innovations has often overshadowed that innovation’s environmental impact. And mining cryptocurrency has been no different, at least to start. But that is beginning to change.

While the ​​world may become more crypto-friendly, it aims to become more eco-friendly. And as investors seek out companies that meet certain Environmental, Social, and Governance (ESG) factors, the pressure to reduce crypto mining’s carbon footprint is mounting.

How Does Crypto Mining Work?

Cryptocurrency mining relies on ​​computer processing power—the more power behind a miner’s computer, the more likely to benefit from transactions. Every crypto transaction must be verified. When a transaction occurs, mining computers run programs to solve a complex problem called “proof of work.” The computer that solves the problem and verifies the coin gets a certain amount of coins.

The amount of processing power required to verify or create one coin through proof of work requires incredible energy. As more miners enter the market, mining only gets more complicated and thus, requires more energy, which creates more carbon emissions.

This model isn’t sustainable, and the crypto industry knows it. So, they’ve begun to develop other ways to verify, and thus mine, coins, such as proof of stake and proof of burn. However, none of them are as widely used as proof of work, which is the mining method of Bitcoin, the largest cryptocurrency.   

Cost-Benefit Analysis

Cryptocurrency mining is undoubtedly costing the environment something. However, some people argue that the trade-off, which is a multi-billion dollar industry, is worth the environmental expense. But the environmental cost will continue to rise if no change is made.

There are some players, though, that are attempting to change the game.

Ethereum, the second-largest cryptocurrency, is moving away from a proof of work mining method to proof of stake. Other industry leaders seek green energy sources to support their growing energy needs. Inspired by the Paris Climate Agreement, the Crypto Climate Accord is an initiative focused on decarbonizing the cryptocurrency and blockchain industry by 2030.

So, there are companies making strides toward a more environmentally-friendly crypto mining process. If investing in cryptocurrency companies with environmentally responsible practices is essential, consider these.

Some companies may conduct private offerings. The JOBS Act enabled companies to conduct a private offering while publicly advertising through verified investing. Become an accredited investor. If you verify accredited investor status through VerifyInvestor.com, you will receive your accredited investor certificate 1-2 days after applying for verification.

For more of the latest news and accredited investor resources, stay up to date on the blog.