Wagner 1

Danielle Wagner

ENG 1201

Professor Kretzer

15 July 2021

How does the environmental impact of currency affect the world?

Like any advancement in technology, there comes a cost. Cryptocurrency, electronic

currency that is encrypted and uses cryptography for security and verification of transactions, has

become extremely popular over the last decade.  As it has risen to mainstream popularity and use

has become more substantial, society has started to discover more about the unintended impacts

of this exciting new technology. Arguably the most prominent is its environmental impact. As

cryptocurrency grows, the environmental impact grows; how do these impacts affect the world?

Cryptocurrency is attractive to its users for many reasons. Bitcoin, the most popular

cryptocurrency was put into circulation in 2009 after it was outlined as a concept by its creator,

Satoshi Nakamoto, in a paper in 2008 (Badea and Mungiu-Pupăzan 48091). Instead of being

managed by a financial institution, Bitcoin, like other blockchain cryptocurrencies, is managed

by a peer-to-peer network. The data is stored in a secure, decentralized approach in “blocks that

are linked as a chain--hence blockchain” (Kӧhler and Pizzol 13598). These peers attempt to

solve a puzzle that awards them the right to add the next block in the chain, in a process called

mining. If they succeed in obtaining the right to add the next block, they are rewarded with the

newly “mined” Bitcoin (Kӧhler and Pizzol 13598) (Goodkind et al. 101281). This allows Bitcoin

to be secure and encrypted while being totally digital and not controlled by any country or

financial institution. However, because the technology required to mine Bitcoins and maintain

this network uses a lot of computation power, it requires significant energy consumption. “To put
 Wagner 2

this into perspective, one Bitcoin transaction is the equivalent to the carbon footprint of 735,121

Visa transactions” (Sorkin). This high level of energy consumption is responsible for the

environmental impacts associated with cryptocurrency. 

Both mainstream media and academia can agree that the issues surrounding

cryptocurrencies and their environmental impact stem from their explicit environmental costs:

high energy consumption and its resulting carbon footprint. Due to the anonymous nature of

mining cryptocurrency and lack of public data, it is hard to correctly estimate exactly how much

energy cryptocurrency consumes. Recent study’s estimates range from 22,000,000,000,000 to

105,820,000,000,000 watt-hours per year, or 22-105.82 terawatt-hours (Kӧhler and Pizzol

13598). These high levels of energy consumption have resulted in worries that cryptocurrency

alone could result in the more than 2˚ C increase that the Paris Agreement was created to help

prevent from happening to mitigate global warming. Although the numbers reported vary widely,

the study conducted by Kӧhler and Pizzol attempted to find the most accurate estimate by

adjusting for geographic location, using applicable past data and estimating future date by

calculating the marginal impact of mining Bitcoin, and by taking into consideration both the

direct and indirect energy consumption of.

                A second negative impact from cryptocurrencies high energy consumption is the

resulting air pollution and health issues caused by it. By studying four main pollutants (carbon

dioxide, fine particulate matter, nitrogen oxides, and sulfur dioxide) that are responsible for

climate damage and increased risk of premature mortality, combining that data with the amount

of electricity used per coin created, and converting both of these figures to monetary amounts

based of off current market values for each cryptocurrency and the value of a statistical life, a

study was able to estimate the monetary impact of cryptocurrency on both the climate and human
 Wagner 3

health. It found that “in 2018, for every $1 of Bitcoin value created was responsible for $0.49 in

health and climate damages in the US and $0.37 in China” (Goodkind et al. 101281).

                Although the potential for negative lasting effects from cryptocurrency is illustrated by

the previous two points, there is also possible positive impacts. There has been an increase in

cryptocurrency mining operations occurring in areas that have cheap energy to offer. Although

some of these places are areas with cheap nonrenewable energy, anywhere from 28%- 77.6% of

Bitcoin mining is powered by renewable energy sources (Kӧhler and Pizzol 13599). This

attraction to cheap, renewable energy sources that make cryptocurrency mining more affordable

and also help offset the negative environmental impacts could result in helping the world

implement green or renewable energy sources faster. It has also been argued that using energy

that would otherwise go to waste from renewable energy sources for cryptocurrency mining, can

help makes newer, expensive renewable energy endeavors more financially viable (Bastian-Pinto

et al. 110520).

                Lastly, the negative environmental impacts in tandem with increasing popularity of

cryptocurrency can help improve the efficiency of technology. The overall energy consumption

will go up as cryptocurrency continues to grow. However, as the technology gets more efficient,

the energy consumption per unit mined will go down. As the push for cryptocurrency to be less

bad for the environment grows, it should speed up the process in developing more efficient

technologies which could have potential applications beyond cryptocurrency.

                In conclusion, the environmental impact of cryptocurrency impacts the world in a

mixture of both positive and negative ways. The spotlight on the negative environmental impact

cryptocurrency causes could push the industry to work even harder to counteract it, advancing

renewable energy and more efficient technology as a positive side-affect. Proponents of

 Wagner 4

cryptocurrency emphasize these potential positives while detractors are more focused on the very

real negatives that exist. Ideally, the potential benefits and advances in technology and renewable

energy will get cryptocurrencies to a point where the societal and economic benefits outweigh

the current cost.

 
 Wagner 5

Works Cited 

Badea, Liana, and Mariana Claudia Mungiu-Pupazan. “The Economic and Environmental

Impact of Bitcoin.” IEEE Access, vol. 9, 2021, pp. 48091–48104.,

doi:10.1109/access.2021.3068636.  

Bastian-Pinto, Carlos L., et al. “Hedging Renewable Energy Investments with Bitcoin Mining.”

Renewable and Sustainable Energy Reviews, vol. 138, 2021, p. 110520.,

doi:10.1016/j.rser.2020.110520.  

Cannucciari, Christopher, director. Banking on Bitcoin, 2016.  

"Center for Global Change Science." Gale Opposing Viewpoints Online Collection, Gale, 2018.

Gale In Context: Opposing Viewpoints,

link.gale.com/apps/doc/MKFIFK562543525/OVIC?u=dayt30401&sid=bookmark-

OVIC&xid=313500a1. Accessed 11 July 2021. 

Goodkind, Andrew L., et al. “Cryptodamages: Monetary Value Estimates of the Air Pollution

and Human Health Impacts of Cryptocurrency Mining.” Energy Research & Social

Science, vol. 59, 2020, p. 101281., doi:10.1016/j.erss.2019.101281.  

Köhler, Susanne, and Massimo Pizzol. “Life Cycle Assessment of Bitcoin Mining.”

Environmental Science & Technology, vol. 53, no. 23, 2019, pp. 13598–13606.,

doi:10.1021/acs.est.9b05687.  

Snyder, Kevin, and Danielle Wagner. “Potential Interview.” July 2021.  

Sorkin, Andrew Ross. “Bitcoin's Climate Problem.” The New York Times, The New York

Times, 9 Mar. 2021, www.nytimes.com/2021/03/09/business/dealbook/bitcoin-climate-

change.html?.%3Fmc=aud_dev&ad-
 Wagner 6

keywords=auddevgate&gclid=Cj0KCQjwraqHBhDsARIsAKuGZeG6ErIJybovdR2x5L8N

8ODMJt5jYNGX8MMp2EESKc5Vl0VVjJsoEpUaAkW7EALw_wcB&gclsrc=aw.dsv.

pubs.acs.org/doi/10.1021/acs.est.9b05687.  

The Stanford Center for Blockchain Research. Stanford University, cbr.stanford.edu/index.html.

Vigna, Paul, and Michael J. Casey. The Age of Cryptocurrency: How Bitcoin and Digital Money

Are Challenging the Global Economic Order. , 2015. Internet resource.