Businesses must correct, not ignore, the growing climate impact of cryptocurrencies

The US coal industry has been in decline for the last few decades, but has seen a resurgence with cryptocurrency miners restarting coal-fired plants in states like Kentucky, Pennsylvania, and Montana. For the largest cryptocurrency, Bitcoin, fossil fuels make up the vast majority of its energy mix, with coal the main source of electricity for Bitcoin globally. Every year, Bitcoin has used as much electricity as entire countries and is providing a lifeline to the fossil fuel industry. The scary thing is that the problem is likely to get much worse unless something is done about it.

This is because, unlike other digital technologies, Bitcoin’s current code requires it to use a lot of electricity. Use a “Proof of Work” (PoW) system to secure the transaction log. The “work” – done by specialized, electricity-hungry mining machines – is essentially a huge competitive guessing game. As the mining machines get faster and more guesses are generated, the system adapts to require more digital “work” which leads to more and more electricity consumption. Meanwhile, the costs to communities and our climate are mounting.

The good news is that Bitcoin doesn’t need to absorb huge amounts of energy. The second largest cryptocurrency, Ethereum, recently changed the way it maintains security and now uses less than 99% of the electricity it previously used. With a change to its open source code, Bitcoin can make a similar move. Its code was changed previously, just last year. But Bitcoin is not a company with a CEO issuing directives. Regulation alone cannot move a decentralized global technology. It will take people and institutions that have invested in Bitcoin to build the support needed to effect change.

In a climate crisis, everyone has a role to play, from everyday Bitcoin enthusiasts to celebrity spokespersons for cryptocurrency trading platforms. But there is a special responsibility for big companies that are ramping up their Bitcoin business, especially those who say they care about our climate.

Recent cryptocurrency news has been dominated by the spectacular crash of cryptocurrency firm FTX. But also in the headlines were new announcements from Mastercard and Fidelity Investments to greatly increase their role in cryptocurrency/Bitcoin trading and investing. Their marketing did not include any mention of Bitcoin’s climate pollution, or what, if anything, they intend to do about it.

We know that companies know there is a problem. In 2017, Mastercard said in its Corporate Sustainability Report that “new research shows that cryptocurrencies like Bitcoin are inherently more energy-intensive than Mastercard’s payment network.” They go on to point out that Bitcoin’s electricity consumption per transaction ranges from 300 kilowatt-hours up to 1,000 kilowatt-hours, more than the average US household consumes in a month. Now, Mastercard is rushing to ramp up its Bitcoin business despite its 2050 “net zero” climate pledge.

Fidelity states on its website that “sound sustainability practices can be critical to the long-term success of an investment.” But they are launching Bitcoin investing offers to millions of their 401(k) customers and will soon debut a retail cryptocurrency trading platform for many more.

These companies, and many others including BlackRock and Goldman Sachs, are launching their Bitcoin business, will face the growing climate risk on their balance sheets. With more scrutiny from regulators and customers, the head-in-the-sand approach won’t work for long.

People shouldn’t have to choose between cryptocurrency and a livable climate. Large companies that want to profit from Bitcoin have a responsibility to step up and support the transition to a new, secure and efficient code. They should bring their weight and resources to the growing movement to change the Bitcoin code to make an investment in what matters most: a livable planet.

Annie Leonard is co-executive director of Greenpeace USA.

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