Crypto Industry Now Strives To Be More Environmentally Friendly

Crypto Industry Now Strives To Be More Environmentally Friendly

Tucked away in snowy Swedish Lapland is a modern gold mine. However, instead of containing picks and shovels, it was filled with thousands of computers .

these machines, known as mining rigs, are working around the clock to find a new unit of cryptocurrency in this case, ethereum, the second largest token globally.

To do so, they must compete with other people around the world to find answers to complex mathematical puzzles, which are getting harder and harder as more computers , known as keeping up with the network.

Its purpose is to ensure system security and prevent fraud. The whole process is backed up by something known as proof of work.

Apparently, it used up a huge amount of energy. Bitcoin is the largest digital currency in the world that also uses this framework. Now it consumes a lot of energy of the whole country. Governments around the world are getting worried.

Some countries, such as China, have banned crypto mining outright. Switch to renewable energy. The mine in question, which is a warehouse-like building located in the military city of Boden, accommodates a total of 15,000 mining rigs.

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The venue is 86,000 square feet, larger than a standard football field. The facility is run by Hive Blockchain, a Canadian company focused on using green and renewable energy to mine cryptocurrencies .

Hive’s operations in Sweden are supported by a local hydroelectric plant in Boden, in the north of the country. The region is famous for its surplus of cheap and renewable electricity.

“In northern Sweden, 100 percent of the electricity is hydropower or wind power. It’s 100 percent renewable,” says advisor at Hive, Johan Eriksson.

Miners Use Excess Energy Capacity

Eriksson said crypto miners are using up excess energy capacity that would otherwise be wasted in other words, it’s not needed by households in the region.

However, the sheer amount of power required to run operations like the Hive’s has concerned officials.

Sweden’s financial watchdog, Finansinspektionen, called on the European Union to ban crypto mining because of its huge energy use.

“Crypto-asset producers are interested in using more renewable energy, and they are increasing their presence in the Nordic region,” the agency said in a statement last year.

“Sweden needs renewable energy targeted by crypto asset producers for our critical service climate transition, and increased use by miners threatens our ability to meet the Paris Agreement,” he added.

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Is decarbonization enough?

Edinburgh-based crypto firm Zumo is part of the Crypto Climate Accord, a coalition of companies aiming to achieve net zero emissions in the crypto industry by 2030.

Kirsteen Harrison, Zumo’s climate policy adviser, said the initiative is working on a piece of software that can verify the source of energy used in crypto mining as renewable energy.

“There’s quite a bit of ordeal going on with it at the moment. If it works, then hopefully it will filter into other sectors,” he said.

Environmental Lovers Community Proposal

Meanwhile, Greenpeace and other environmental groups are calling for the bitcoin community to replace its proof-of-work mechanism with so-called proof of ownership. That would eliminate the huge computational costs of verifying new crypto transactions.

Ethereum is currently in the midst of a lengthy transition to proof of stake, a move that proponents say will reduce its energy consumption by more than 99 percent and other cryptocurrencies, such as cardano and solana, already operate on proof-of-stake networks.

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However, as Harrison explains, moving cryptocurrencies like bitcoin out of proof of work is easier said than done.

“I don’t believe that there is an option to eliminate proof of work, precisely because no single player has control over the system,” he said.

Not everyone agrees that while Hive and other crypto companies are increasingly turning to green energy to drive their operations, there are many other companies that have not followed suit with the shift to renewable energy.

Support Greener Crypto

Some deliberately use gas that is supposed to be burned to generate electricity for crypto mining, for example.

Since China banned crypto mining, bitcoin proponents hope this will make cryptocurrencies greener.

But a peer-reviewed study released in February found bitcoin mining only got dirtier in 2021 with miners actually flocking to areas more dependent on coal and other fossil fuels, including Kazakhstan and southern US states such as Texas and Kentucky.

Part of the problem is the decentralized nature of cryptocurrencies like bitcoin. While there are various groups now claiming to represent the industry, bitcoin has no central authority and anyone can participate in the network.