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Scope of investment in carbon capture technology and impact of Cryptocurrency mining on Climate

Cryptocurrency's failure isn't just its plummeting financial losses over the last year but also the devastating effects the digital currency has had on our planet.


Cryptocurrency mining has a huge carbon footprint. Here’s what experts think we should do about it.


As currencies like bitcoin and dogecoin make digital currency as valid a form of payment as the U.S. dollar and euro, experts seek new environment-friendly solutions to the massive amounts of energy cryptocurrency consumes.


Cryptocurrencies are digital currency that are not subject to a central authority that regulates the currency’s value like Federal Reserve for the U.S. dollar or the European Central Bank for the euro. Despite fluctuating market values that are more volatile than most nationally backed currencies, cryptocurrency has taken a foothold in the financial world. The most popular cryptocurrency, bitcoin, has a combined market value of $653 billion U.S. dollars—equivalent to 1.8% of the combined value of the world’s money supply, according to Investopedia. Most of the energy expenditure of cryptocurrency comes from the process by which coins are made available known as mining. Mining involves computers with large processing power and energy consumption solving a series of mathematical equations that helps verify proof of transactions.





Cryptocurrencies are digital currency that are not subject to a central authority that regulates the currency’s value like Federal Reserve for the U.S. dollar or the European Central Bank for the euro. Despite fluctuating market values that are more volatile than most nationally backed currencies, cryptocurrency has taken a foothold in the financial world.


The most popular cryptocurrency, bitcoin, has a combined market value of $653 billion U.S. dollars—equivalent to 1.8% of the combined value of the world’s money supply, according to Investopedia.


Most of the energy expenditure of cryptocurrency comes from the process by which coins are made available known as mining. Mining involves computers with large processing power and energy consumption solving a series of mathematical equations that helps verify proof of transactions.


Bitcoin mining consumes around 110 terawatt hours per year, which is 0.55% of global electricity production, according to the Cambridge Center for Alternative Finance. This is roughly equivalent to the annual energy draw of countries like Malaysia or Sweden.


Forbes reported that mining sometimes barely allows miners to break even with the crypto they receive for “validating transactions after considering the costs of power and computing resources.”


“There is a direct relationship between the price of bitcoin and the energy consumption of its network,” said Alex de Vries, a Dutch data scientist and founder of the cryptocurrency blog Digiconomist.


Experts like de Vries are concerned that the average user of cryptocurrencies should be aware of the energy expenditure these systems utilize.


The annual carbon footprint of all bitcoin is over 66 metric tons of carbon dioxide, according to de Vries’ index. This is a footprint comparable to that of Israel according to the index.


The index also catalogs the electronic waste that cryptocurrencies produce from frequent replacements to the high intensity computers used to mine bitcoin across the world. According to the index, bitcoin produces over 6 kilotons of electronic waste annually, comparable to electronic waste produced by a country the size of Luxemburg.


Disposing of electronic waste by way of burning can release harmful chemicals into the air that exacerbate the effects of climate change, according to climate.org,


The effects of climate change intensify when the energy used to mine bitcoin and other cryptocurrencies comes from non-renewable sources like fossil fuel combustion.


A 2020 Cambridge Center for Alternative Finance study estimated that only 39% of all energy used to mine bitcoin is carbon neutral.


“The leading sources [like Cambridge] have always indicated that the majority is coming from fossil fuels,” de Vries said.


He said that the areas that do use carbon neutral sources of energy do not use them year-round. For example, he said Chinese bitcoin miners utilized coal in the winter and hydroelectric power during the summer when it was more efficient before the practice was banned in the country.


“Bitcoin miners don’t just love cheap energy, but they also love constant sources of power,” de Vries said. “That tends to be a little bit complicated when you’re trying to combine that with renewable energy sources.”


Experts like de Vries see cryptocurrency in its current state as a detriment to the world’s environmental health. He said the system currently in place that involves massive mining operations is “extremely inefficient.”


Multiple cryptocurrency mining organizations joined the Crypto Climate Accord—modeled after the Paris Climate Accord—with an ultimate goal of reducing the carbon footprint of mining. The Accord is supported by over 150 companies and individuals across the energy, finance and climate sectors.


The system currently utilized for verification by most cryptocurrencies is known as proof of work. This is the energy-hungry method utilizing mining that de Vries’ index primarily focused on with bitcoin. He said the alternative could reduce energy consumption by 99.95%.


“Running on proof of work is extremely inefficient. But there are alternatives and they’re already being used without mining,” de Vries said. “The most popular alternative to that kind of system is called proof of stake. In these systems there is no incentive to use energy consuming hardware because your chance of winning depends on how much wealth you have rather than how much computation power.”


Proof of stake systems use a network of contributors that spend their own crypto in exchange for a chance to validate new transactions and earn a reward, according to Coinbase.


Proof of stake is utilized by currencies like Ethereum 2.0 as a faster, more energy efficient and environmentally friendly method of decentralized currency.





Why is it bad for the environment? Very simply, the amount of energy needed to power crypto puts millions of metric tons of carbon into the air. The worst cryptocurrency of them all is Bitcoin, the original form of crypto and the largest.


To put some figures into perspective, each Bitcoin transaction currently utilizes 1201.34 kWh of electricity. This is equivalent to an average US household's power consumption over 41.8 days. When you look at the figures of energy required for Bitcoin mining across the last twelve months, it is more than the amount of power Argentina has consumed within a year, according to a study by The Cambridge Centre for Alternative Finance.







The mining problem

The root of crypto's eco-damage stems from Bitcoin mining—but it's not the type of mining you think. Mining for fossil fuels involves heavy machinery, digging, lots of physical labor, and logistics. Bitcoin mining is as simple as switching on a computer server.



The ease of accessibility can turn any mortal into a miner within minutes (and a few complex processing servers that cost thousands of dollars each).


The decentralized currency relies on its community competing to solve complex mathematical equations using a large network of computer servers. Each server is battling it out to come up first with the solution, yet there can only be one winner. It's a race against time, with the server's owner being rewarded in Bitcoin for each correct answer.


But the overall effect of this mining on carbon emissions is tremendous. According to reports, the production of Bitcoin emits nearly half a ton of carbon dioxide during every transaction. This sheer volume of emissions alone would require 300 million trees to be planted to offset this amount of CO2.


Cryptocurrency has reached a tipping point. From viral Super Bowl ads to a $700 million naming rights purchase for the most iconic sports venue in Los Angeles, it has graduated from obscure trend to mainstream legal tender. Despite not being a legal tender in any nation except El Salvador, digitally mined virtual currencies like Bitcoin, Ethereum, Tether, BNB and others are stirring a global craze among people eager to create new wealth and transact currencies created outside of existing banking systems for governments.


Many investors have turned small crypto investments into massive crypto returns. The price of Bitcoin tokens, for example, has risen thirtyfold in the past five years. However, this rapid growth is coming at a cost to the planet.


Computing systems that transact and mine cryptocurrencies consume lots of energy – more than entire nations, according to The New York Times.


“The Cambridge Centre for Alternative Finance calculates that Bitcoin mining, on the whole, consumes slightly more energy than gold mining, which is a fair comparison, since both Bitcoin tokens and gold are pitched as alternatives to fiat currencies such as the U.S. dollar,” economics writer Peter Coy wrote in an April 2022 New York Times Opinion piece.


“Bitcoin mining consumes more electricity than Norway but slightly less than Egypt…and accounts for 0.62 percent of the world’s total electricity consumption,” Coy wrote, citing data from the Cambridge Center report.


Coy pointed to the European Parliament’s move toward insisting that all cryptocurrencies meet environmental sustainability standards, showing that regulators are jumping into the fray. And leading technologies are putting more attention on the topic as they see opportunities for growth and meaningful innovation.





In the foothills of the Swiss alps, a giant set of industrial fans whirring loudly on the roof of a waste incinerator hardly resembles an invention that could save the planet.


But these machines — designed to pull carbon dioxide out of the air — have become one of the hottest areas of climate-related investment in recent months.


Venture capital groups and global resources companies including BHP Billiton, Chevron and Occidental Petroleum, have poured tens of millions of dollars into “direct air capture” technology this year, at a time of growing concern over climate change.


While the exact technology varies between the three start-ups that are operating these DAC facilities, they all share the basic concept of giant fans pulling air across a contact surface that binds with the CO2 molecules. The contact material is then heated to unbind the CO2, so that it can be collected.


The trio of start-ups have attracted more capital and attention since global emissions hit a new high last year, despite the high cost and limited commercial markets for the technology.


“Three years ago, people were like, you are investing in pixie dust and unicorns,” said Julio Friedmann, a researcher at Columbia University’s Center for Global Energy Policy and founder of Carbon Wrangler, a consultancy that advises DAC start-ups.


“It has changed because companies now recognise that climate change is a threat, and they see this as an essential mitigation tool,” Mr Friedmann added.







In Switzerland, DAC start-up Climeworks has raised a total of SFr50m ($50.1m) and has 14 plants operating around the world.


Jan Wurzbacher, its co-founder, has lofty ambitions. “Our vision is to capture 1 per cent of global emissions. That requires a lot of capital,” he said.


Meanwhile, New York-based Global Thermostat, which previously raised $42m in three rounds from 2010-17, is in the middle of a new $20m fundraising round.


The chemical process to extract CO2 is not new — it was even used during the second world war where CO2 scrubbers helped maintain breathable air in the confined space of submarines. However, as an environmental strategy, the concept of DAC was largely dismissed until recently, largely because of the cost of building the machines and the energy required to run the process.


Now, an increasing number of scientists believe pulling CO2 out of the atmosphere — once considered an improbable long-shot — will be part of the answer for limiting global warming.



While there are many ways to remove CO2 from the atmosphere — including planting more trees, storing carbon in soils or the ocean, and capturing the CO2 produced by burning wood — DAC has the advantage of taking up less space than other options.


The most common way of capturing CO2 has been at its source, for example, by scrubbing it out of the flue gas from a power plant. This reduces emissions but does not lower the level of the gas in the atmosphere.


But even as more funding flows into direct air capture start-ups, the technology is still far from mature.




More than 250 companies and individuals spanning the crypto and finance, technology, NGO, and energy and climate sectors have joined the Crypto Climate Accord as Supporters. Our Supporters approve of the Accord’s objectives and are involved with helping advise, develop, and scale solutions in support of the CCA. Becoming a CCA Supporter does not verify that a Supporter organization has already decarbonized. Crypto Climate Accord Signatories are crypto market participants that make a public commitment to achieve net-zero emissions from electricity consumption associated with all of their respective crypto-related operations by 2030 and to report progress toward this net-zero emissions target using the best industry practices. All Signatories also serve in the role of being a Supporter.



The revenue from Bitcoin mining has been going up consistently the last few years, and in the most recent years, Bitcoin mining has generated approximately $13 billion worldwide, and it is expected to hold steady or increase in the years to come.


Frontier is an advance market commitment to buy an initial $925M of permanent carbon removal between 2022 and 2030. It’s funded by Stripe, Alphabet, Shopify, Meta, McKinsey, and tens of thousands of businesses using Stripe Climate.


Frontier is an advance market commitment (AMC) that aims to accelerate the development of carbon removal technologies by guaranteeing future demand for them. The goal is to send a strong demand signal to researchers, entrepreneurs, and investors that there is a growing market for these technologies. Importantly, Frontier aims to help create net new carbon removal supply rather than compete over what exists today.


In practice, its team of technical and commercial experts facilitates purchases from high-potential carbon removal companies on behalf of buyers. Over time, we plan to open Frontier to new buyers to further increase demand and spur new supply.


The concept of an AMC is borrowed from vaccine development and was piloted a decade ago. The first AMC accelerated the development of pneumococcal vaccines for low-income countries, saving an estimated 700,000 lives.


While the market dynamics of carbon removal and vaccines are not identical, they face similar challenges: uncertainty about long-term demand and unproven technologies. AMCs have the power to send a strong and immediate demand signal without picking winning technologies at the start.



CLIMEWORKS company has developed technology of Direct Capture.

Direct air capture (DAC) technology is one of the key technological solutions to fight climate change. It captures CO₂ directly from the air, reducing the atmospheric concentration of CO₂, by only using renewable energy, energy-from-waste, or other waste heat as energy sources.


How does it work?

It is a three-step process


Air is drawn in through a fan located inside the collector. Once sucked in, it passes through a filter located inside the collector which traps the carbon dioxide particles.

When the filter is completely full of CO₂, the collector closes, and the temperature rises to about 100°C - a very low temperature if we think that it is the same temperature that it takes to boil water to make a cup of tea!


The latest IPCC (International Panel on Climate Change) report clearly states that urgent climate action is needed to halve emissions by 2030. To do so, we must first drastically reduce emissions and, to give the world a chance to limit global warming to 1.5°C, we must remove legacy CO₂ emissions from the air and store them deep underground in a permanent and safe way.


CARBFIX company. Carbfix has numerous ongoing projects! From the geothermal sector to heavy industry, we aim to expand the application of our climate change mitigating technology across various emitting sectors.


The Carbfix capture and injection demonstration plant has been operational at Hellisheiði since 2014 injecting about 12,000 tonnes of CO2 annually. With the addition of the Silverstone project, 34,000 tonnes of CO2 will be captured and injected annually.


Project Silverstone is expected to reduce emissions by 150,000 tonnes of CO2 over the project lifetime.


This project alone will deliver 10% of Iceland's Climate Action Plan calls for by 2030 within the energy and industrial sectors not covered by the EU ETS.


Through the project, a new CO2-optimised capture plant will be constructed resulting in 150,000 Tonnes of CO2 being mineralized.



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