In recent years, cryptocurrency has rapidly grown in popularity in unprecedented ways. Created in 2009, Bitcoin is a prime example of the extreme growth of cryptocurrency, as having once been valued at around ten cents per coin in October 2010, each coin is now worth around $64,000. This extreme growth has caused cryptocurrency to become widely discussed and debated for its controversial rise, but what exactly is cryptocurrency? 

“A cryptocurrency is essentially a digital currency backed by cryptographic encryption. […] Most cryptocurrencies operate on the blockchain, which is a secure, decentralized, public ledger that can’t be hacked […] There is no need for banks, government assurance, or any other central party to verify legitimate transactions because it is verified through cryptographic encryption,” Adam Mhatre, co-president of the Cryptocurrency Club at Menlo, said. 

Despite the novelties of cryptocurrency, it still comes with several drawbacks, the main one being that cryptocurrency transactions use a great amount of energy: so much so that a single transaction of Bitcoin uses over 1,700 kilowatt-hours of energy, according to Forbes. To put that amount into perspective, that’s almost twice the amount of energy used in a month in an average American household.

Bitcoin also generates around 11.5 kilotons of electronic waste annually, according to an article written for the Columbia Climate School. The reason for this extraneous amount of waste comes from the specialized equipment used for mining Bitcoin that usually goes obsolete after around 1.5 years. This creates a self-perpetuating cycle of creating more and more efficient mining equipment, thus consequently generating more and more e-waste, which ultimately finds its way to environmentally harmful landfills.

But these aren’t the only ways that cryptocurrency harms the environment. Another cryptocurrency, Ethereum, used a “proof-of-work” system for transactions and keeping track of account balances for Ethereum users. However, this proof-of-work system was incredibly energy-hungry: every utilization of the proof-of-work system added up to around 73.2 TWh of energy in a year, which is equivalent to the energy consumption of a medium-sized country like Austria, according to a post on Ethereum’s website. 

Ethereum is working to solve this problem of energy consumption by implementing the “proof-of-stake” system, which uses significantly less energy, according to NBC. Nonetheless, several other prominent cryptocurrencies like Bitcoin and Dogecoin still utilize the proof-of-work system. And since 65% of Bitcoin miners are located in China, which mainly uses coal-based energy resources, it will be hard to fully erase the negative impacts of cryptocurrency on the environment until all cryptocurrencies are able to utilize more power-efficient systems. 

Whether you’re interested in cryptocurrency or not, it’s hard to deny that the energy consumption of cryptocurrency seems excessive. In fact, because of this growing sentiment, companies like Discord are facing harsh backlash for considering implementing cryptocurrencies into their usage. This rising sentiment against the implementation of cryptocurrencies will, therefore, hopefully, encourage companies to either step away from using cryptocurrencies or will encourage more cryptocurrencies to utilize more power-efficient systems.