Hey, I'm Kal Penn, and this is Getting Warmer.
Cryptocurrency is one of those things that's easy to dismiss
as a fad, like canned wine or things being cake.
But whether you're a crypto skeptic or a laser
eyed diehard who tips their dry cleaner with Dogecoin, don't be that guy,
you have to admit that cryptocurrency has become a fact of our economy.
Even after its crash last year,
its total market value is still almost $1 trillion.
That's trillion with a T and dollars with a D for anyone spelling at home.
While crypto is having a real impact on the economy,
I want to focus on the potential impact it's having on the climate.
We've been talking a lot about crypto's energy problem.
It is dirty.
It is noisy. It uses a lot of energy.
So much energy that some companies are using power plants
to fuel their operations.
Servers are the backbone of our digital world,
as you can hear they are loud, large and
power hungry.
Bitcoin uses an enormous and growing amount of energy.
Its annual power consumption went from around seven terawatt hours
in 2017, similar to Albania, to over 100 terawatt hours by the end of 2022.
Nearly as much as the Netherlands or 16 Albania's give or take a
Montenegro.
In China, Bitcoin mining became such a drain on the electricity supply
that they banned it completely.
So what makes cryptocurrency such an energy hog?
Well, it comes down to three words: proof of work.
Traditional old school money is created by a central institution
that validates it and distributes it.
But cryptocurrency relies on a network of computers to do this called miners.
These miners create new money and then verify
transactions with the proof of work system.
It's essentially a lottery that miners enter by attempting
to solve a very complicated calculation.
The calculation itself is completely pointless, like
high school geometry.
But it proves that you've made a computational effort to mine that Bitcoin.
That's the proof of the work of these transactions.
And whichever miner wins the lottery wins Bitcoin.
I mean, that's why they play.
Unfortunately, no matter who wins, the climate loses
because those miners aren't actually cute little cartoon workers with hard hats,
although that would be awesome,
they're giant containers full of thousands and thousands
of purpose built computers using massive amounts of electricity.
And as more computers enter these lotteries, the pointless
calculations get more complex, which requires more computers
and more electricity, which obviously makes more carbon pollution.
Emissions from Bitcoin alone are estimated to be comparable to Austria.
Or 14 Albania's,
my new favorite unit of measurement.
So if crypto is here to stay, the question becomes
what do we do about its massive carbon footprint?
Well, one option is to replace the proof of work system
with a different system called proof of stake.
Instead of miners doing calculations to enter
the lottery, miners simply pay to enter.
This uses way less energy.
By some estimates, 99.9% less.
Ether, the world's number two cryptocurrency after Bitcoin
switched over to this method last year in a major upgrade known as the merge.
Sorry, I tried to
make that sound epic, but still pretty nerdy.
Bitcoin has no plans to switch to proof of stake, but
miners can still reduce their footprint if they switch to renewable energy.
Electricity accounts for about 80% of a Bitcoin miner's
operating cost, so they'll go wherever the deals are.
Sometimes that means hooking up to coal powered electricity in Kazakhstan.
But as the cost of renewables comes down, Bitcoin miners are discovering
a growing number of places with plentiful, cheap, renewable energy.