Crypto may be crashing, but its carbon footprint isn’t

Alex de Vries, a data scientist at the Dutch Central Bank, said the crypto sector’s $1T loss in the past few months may have slowed the growth of data mining, but it hasn’t decreased it. He estimated that, respectively, Bitcoin and Ether use as much electricity as Thailand and Kazakhstan.

Why should we care?
Crypto mining involves both fixed and variable costs. Fixed costs include hardware like computers and graphics cards, while variable costs mainly involve paying for electricity. Since crypto mining rigs are already set up, miners may be dissuaded from setting up new infrastructure, but keeping existing rigs running remains viable. A paper published by de Vries last year suggests that a Bitcoin crash down to $8,000 would lead to a more substantial reduction in crypto’s total emissions, but that it would still use about 60% of the electricity it does now. These market forces should be of note to ecologically conscious regulators who see crypto as a threat to climate goals—market-driven crashes alone cannot alter the crypto mining landscape and its carbon footprint. Adding more costs to mining in the form of taxation and zoning may lessen the sector’s environmental effects, but they must be calculated in relation to the potential price of cryptocurrencies, as well as the dogged beliefs undergirding crypto initiatives.