Cryptocurrency has not had an easy road toward public understanding. At this point in time, major geographical territories have banned crypto outright, and others have clamped down on mining. Beyond the threat that some governments feel from the popularization of a decentralized technology, another major reason for the rejection of cryptos like Bitcoin has been due to its environmental impacts.
For those that don’t know, Bitcoin and other Proof-of-Work cryptocurrencies are heavy contributors to carbon emissions. In order to mint a new coin and verify the currency, miners need to solve increasingly complex mathematical equations. These equations must be solved by computers, which take lots of energy to run.
The high energy consumption directly results in carbon emissions, with the total amount emitted only increasing year upon year. To face this crisis, several blockchain businesses are attempting to convert to more sustainable verification systems. Beyond that, new companies are trying to overcome the issue by focusing on carbon offsetting.
In this article, we’ll dive into the history of cryptocurrency mining, touching on the legal and governmental restrictions, the movement to green energy, and the beginning of green cryptocurrency mining.
Let’s get right into it.
The Legislative Wave
A mixture of the poor environmental outlook of mining POW cryptocurrencies and a rejection of the alternative currency itself lead to a wave of bans across the globe. Major geographical territories placed restrictions on their citizens – prohibiting people from mining cryptocurrency, holding cryptocurrency, and buying it in the first place.
One of the first major players to ban cryptocurrency was China, with the People’s Bank of China restricting all cryptocurrency transactions as of September 2021. Their main cited reason was to prevent financial crime. However, many have speculated that the real reason is to prevent capital from leaving China on a large scale.
China was one of the world’s leaders in terms of cryptocurrency mining, placing second only to the United States. Since their announcement, their market share of Bitcoin mining fell nearly to zero. While the numbers have been steadily coming back up, signaling covert mining operations, they’re still nowhere near where they once were.
In January of 2022, Russia followed suit, with the Russian Central Bank cracking down on Bitcoin mining and cryptocurrency transactions following a wave of money laundering charges. Their main reason was financial terrorism, placing an across-the-board ban on cryptocurrency by the end of Jan 2022.
Before these two major bans, China and Russia were the second and third most active countries when it comes to mining Bitcoin. Their industry-changing decisions impacted the crypto market dramatically, causing one of the first major bear periods of the last 12 months.
And, as if to make matters worse for crypto miners, the state of New York has just announced state-wide bans on certain types of cryptocurrency mining. That’s now the ex-three largest producers all now having some element of sanction that prevents mining in its entirety.
In New York, the ban isn’t quite so black and white as it is in Russia and China. While companies can still continue to mine, they cannot now renew their operating permits, meaning there is only a fixed amount of time that they can continue on before having to relocate their mining centers.
With the US, China, and Russia all placing restrictions on the mining of Bitcoin, it’s no wonder that this issue is getting so much media attention.
The Movement to Green Energy
With the severity of restrictions, cryptocurrency networks have now taken it upon themselves to move to greener methods. Proof of work is incredibly energy intensive, with this being the cause for the vast majority of carbon emissions from cryptocurrency. In order to distance itself from the environmental crisis, Ethereum – the second-largest cryptocurrency by market cap – has recently made a switch to Proof-of-stake.
Although not fully complete, this movement is going to reduce the emissions of Ethereum by over 99%. This radical movement represents just how seriously the world of blockchain is taking the emissions crisis.
Equally, studies by Cambridge University have been breaking down where the actual energy that’s supplying Bitcoin mining is coming from. Across the globe, it is reported that nearly 62% of the energy that’s needed to keep all Bitcoin mining operations active is actually run by hydroelectric power.
This study has been a saving grace for many crypto miners, citing this statistic as evidence that the practice is not quite as bad as it seems. While this may be the case, fossil-fuel-powered Bitcoin mining is still responsible for the same amount of emissions as entire countries like Jordan and Sri Lanka.
With this in mind, Bitcoin needs to make a change fast if it’s going to survive in our increasingly environmentally-conscious world.
The Rise of Green Bitcoin Mining
As a legacy system, shifting Bitcoin from POW to POS isn’t quite as simple as it might seem. Realistically, even if this ecosystem did commit to making the move, it would take years of planning and potentially over a decade to convert fully. At present, this isn’t a realistic solution, leaving Bitcoin in a slightly sticky situation.
Instead of completely shifting the already established infrastructure of Bitcoin, blockchain businesses are increasingly looking for alternative solutions. One of the strongest that has recently presented itself is PEGA Pool. This UK-based company is an eco-friendly Bitcoin mining pool.
Miners from around the world can join the pool and take advantage of its international infrastructure. With a global span of servers, there is very little downtime and very low latency for miners. While BTC miners are set to benefit from the highly resilient system PEGA Pool has in place, their main contribution to the industry is their focus on the environment.
Their central mission is to reduce the total emissions that Bitcoin mining accounts for, helping to push toward sustainability in this industry. A portion of the pool fees on the platform is put toward planting trees, helping to offset carbon emissions.
Currently, PEGA Pool is shaking up the industry, acting as the very first ecological mining pool in the world. At present, they’ve planted over 66,000 trees, with their yearly offset of carbon coming in at around 1760T of CO2.
Beyond just offsetting CO2, they also aim to incentivize the use of renewable energy in the industry. Miners that join their pool receive a different pool fee based on what energy they use. Those that are using fossil fuels will face 2% fees, while those that can prove they’re mining with renewable energy can get a 50% discount on all pool fees.
The rise of green Bitcoin mining, as posited and executed by PEGA Pool, is a fantastic example of the innovation that’s possible within this industry. Instead of doubling down on a heavily polluting industry, the infrastructure and carbon offset scheme that PEGA Pool uses will help to reduce carbon emissions from the industry.
And, considering that PEGA Pool is currently the 12th largest crypto mining pool in the world, this project is already making a major impact. During the first quarter of 2023, this project will go public from their testing Beta. At that point, with the public interest in the project and the global incentive to reduce emissions, we expect this project to surge in activity.
Cryptocurrency mining has traveled a long way to arrive where it is currently. From a heavily polluting industry with global restrictions to one that’s turned a corner and is now seeking green alternatives, Bitcoin’s progress has been astounding.
As the world’s legacy and leading cryptocurrency, any major changes that Bitcoin makes cause a trickle-down effect throughout the entire industry. If projects like PEGA Pool can lead Bitcoin mining to a place where it is truly sustainable, then we’re going to see this whole field seek environmentally-friendly operational methods.
Although still not completely remedied, Bitcoin mining is taking a very certain step toward sustainability. We can’t wait to see how far this is pushed over the coming years.