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Does crypto mining harm the planet ? The only way to know is to analyze the energy source it uses - dirty or green - and compare to its traditional alternative - the banking system. 



It is true that mining necessitates great amounts of electricity. This is in part what makes <a href="https://d.center/explore/proof-of-work" class="ek-link">PoW-based</a> cryptocurrencies, such as <a href="https://d.center/explore/bitcoin" class="ek-link">Bitcoin</a>, so robust : electricity and hardware are the price to pay for a secure network, resistant to attacks and malicious actors.



Of course this raises ecological concerns. Is it really sustainable to spend (someone would even say waste) such huge amounts of electricity to mine coins?



Well, electricity consumption as such does not harm the planet. What does harm it is obtaining electricity from “dirty” sources: coal, oil etc. So when analyzing crypto mining's impact on the environment the first question must be&nbsp; “Where does this electricity come from ?”, followed by “What does this crypto aims at achieving?”. If a blockchain is set to replace an existing activity, it would be judicious to compare their carbon footprints to each other.



<h2>Where does mining electricity come from?&nbsp;</h2>



The world’s cheapest energy can be found near renewable sources, such as dams or wind farms. However, electricity is remarkably hard to stock and to transport, so unused energy in these places is most often simply lost. Luckily mining farms, unlike banks’ head offices, do not need to be located in city centers, so they can very well be set near a dam, enjoying cheap and green energy.



And that’s what mining farms actually do. Global Bitcoin mining is estimated to have 57.7% of renewables in its energy mix, as per the <a href="https://bitcoinminingcouncil.com/wp-content/uploads/2021/10/2021.10.19-Q3-BMC-Presentation-Materials-Final.pdf" class="ek-link">BMC report of September, 2021</a>. 



Since the exodus of miners <a href="https://d.center/posts/china-banning-bitcoin-mining" class="ek-link">from China</a> in the summer of 2021 (65% of global hashrate was produced by the Chinese miners before the ban, partly from coal plants), and consequently <a href="https://d.center/posts/crypto-miners-leaving-kazakhstan" class="ek-link">from Kazakhstan</a> in Autumn 2021 (a share of chinese miners briefly landed there, but left after it became clear that the country's energy sources - mostly coal plants - were not sufficient), the share of coal-powered mining has decreased significantly.



A lion’s share of mining farms are using hydro-power and wind energy in the US (Washington state, New York, Texas), Canada, Scandinavia, The Caucasus. The farms are also built in Iceland, a country that enjoys abundant geothermal energy, and beyond the Arctic Circle in the Russian Norilsk, where the temperatures as low as -40° C naturally cool down the equipment.



There are also situations where crypto mining can be beneficial to the environment, for example in the case of stranded gas - a byproduct of oil extraction that is quite expensive to capture and transfer, so it is often simply rejected into the atmosphere. Mining farms are being built near oil-extraction plants (some examples include Texas and North Dakota) to utilize the stranded gas to mine coins, instead of polluting the air.



For the moment global crypto mining is not carbon-neutral, but many efforts are made to make it so, with green mining companies like Iris Energy, Gryphon or MintGreen raising record fundings to develop their activity. The latter is set to not only mine green, but also to increase the energy efficiency : projects of recycling heat waste from mining into hot water and heating services are being developed, with pilot programs including a whiskey distillery and a sea salt facility in Canada.&nbsp;



<h2>What does mining help achieve?</h2>



The blockchain is a decentralized alternative to traditional organizations, and its carbon footprint should be considered as an alternative to the carbon footprint of a system it is to replace.&nbsp;



In the case of Bitcoin it is [tooltip content="fiduciary money with no intrinsic value, dependent on the government and the central bank (like dollars or euros)"] fiat money [/tooltip] and gold.&nbsp;



Cambridge University has set up a <a href="https://cbeci.org/">Bitcoin Electricity Consumption Index</a> that estimates Bitcoin network power almost in real time. Its electricity consumption as of August 2021 is around 14.6 GW, which is estimated at 128 TWh of annualised consumption. More recent BMC study (September 2021)indicates the consumption of 188 TWh yearly. To put things in perspective, the energy footprint of <a href="https://www.nrdc.org/sites/default/files/home-idle-load-IP.pdf" class="ek-link">"always-on" devices</a> in American households is appr. 1375 TWh (data of 2015), 7 times that of the Bitcoin network.



There are much less studies on the ecological impact of the banking industry (like many others we just take for granted), and the proper methodology is yet to be defined. However it is already possible to see the main lines. 



A 2021 <a href="https://docsend.com/view/adwmdeeyfvqwecj2" class="ek-link">study </a>by Galaxy Digital, an asset management firm specializing in cryptocurrencies, indicates that the banking system, according to only 4 metrics (branches, servers, ATMs and card network's data centers) consumes over 263 TWh yearly. Bank offices, servers and the majority of ATMs are situated in cities and have no choice but to take their energy from the city grids, which unfortunately don’t have much renewables in their mix, thus making much of banking electricity dirty. It is also clear that the real carbon footprint of the whole banking industry is much higher when taking into account all its aspects (employees transport, whether it is private cars or private jets, cash transportation... etc).



Gold mining industry has been studied better. In addition to a desastrous impact on the environment (pollution of soils and waters with toxic chemicals, deforestation, exposure of humans to the toxic vapours...) it uses approximately 571 TWh.



So, 128 to 188 TWh consumed by Bitcoin with 58% of renewable energy vs >263 TWh consumed by banks, with mostly dirty energy and 571 TWh consumed by gold mining + pollution. All things considered, it might be somewhat presumptuous to declare Bitcoin the enemy of the planet even with those figures, and it will be even more so in the years to come, considering a strong green mining trend.



As improbable as it may sound, Bitcoin could be an environmentally-friendly alternative to fiat money. Financing green miners and developing new ways of making electricity consumption more efficient, i.e. to use the heat waste, are key steps to make Bitcoin carbon-neutral.&nbsp; Moreover, the efforts that miners deploy to find more green solutions could benefit other sectors as well.

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Some blockchains were created to enable cryptocurrencies. Others serve primarily as smart contract platforms, allowing to decentralize digital economy: online platforms, financial flows, collaboration... and of course the nascent Web3 sector.



The number of blockchain use cases is constantly growing, as does its ecosystem.



This is a high level view on what blockchain in practice looks like today. 



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<h2 class="wp-block-heading">Cryptocurrencies </h2>



With <a href="https://d.center/explore/bitcoin" class="ek-link">Bitcoin</a>, the first practical application of the blockchain was currency, or more precisely “P2P electronic cash system”, as described by Satoshi Nakamoto himself. Invented in order to remedy the failing monetary system, the blockchain proved itself to be particularly well suited for such a role, providing an independent, immutable and transparent transaction ledger.&nbsp;



Following Bitcoin, new <a href="https://d.center/explore/cryptocurrencies" class="ek-link">cryptocurrencies</a>-focused blockchains have emerged, trying to ameliorate this or that aspect of the blockchain: transaction throughput like Litecoin, privacy like Monero… 



Some cryptocurrencies have appeared as an extension of a community, like the Doge memecoin.



Other cryptocurrencies, created as tokens (and not native coins), serve as representations of fiat currencies on the blockchain. They are called stablecoins, the biggest ones being USD-pegged Tether and Circle.



<h2 class="wp-block-heading">Smart contract blockchains</h2>



Currency is not the only thing that can profit from the blockchain's decentralization.



Virtually any digital system (hence most of organisation that use them) can benefit from eliminating central authority.



This is achieved through the use of <a href="https://d.center/en/explore/smart-contrats" class="ek-link">smart contracts</a> - autonomous and self-executing programs that run on the blockchain. Smart contracts allow the development of DApps, or decentralized applications, and power the emerging web3 sector.



The first and most popular smart contract platform is Ethereum blockchain, but it has many competitors: Solana, Cosmos, BNB Chain... etc



The difference between a Cryptocurrency blockchain and a Smart contract blockchain is now rather theoretical and can be understood only by questioning the blockchain’s purpose: whether it was conceived to support a currency or to host elaborate smart contracts. Both types of blockchains need a native coin to pay the network nodes for running the protocol, however in cryptocurrencies’ case the native coin is a goal in itself, whereas for smart contract blockchains it is a payment for running smart contracts. 



<h2 class="wp-block-heading">Blockchain use cases</h2>



Almost every traditional economic sector can use blockchain's qualities.



⛓️ Decentralized systems are intrinsically fairer than centralized ones: their transparency and self-executing nature are much better in redistributing value and allowing the users to be true and sole owners of their data. This quality is substantial when it comes to online platforms, be it social media, cloud computing or ride hailing.



⛓️ Blockchain being a transparent and immutable ledger, it is also particularly suitable for data certification purposes.



⛓️ Smart contracts can automate numerous processes, not only increasing the overall cost and time effectiveness, but also providing users with a guarantee that no one can unilaterally change the rules underlying the DApp.&nbsp;This notably enables the new type of trustless collaboration within DAOs, or Decentralized Autonomous Orgnizations.



⛓️ Finally, the blockchain structure allows fast and easy data and values transfer, without any borders or other limitations. This quality is highly appreciated in finance, and many traditional players have already incorporated crypto into their offer: exchange, custody, asset management, asset tokenization... Besides, a crypto-native version of finance, known as the DeFi, is developing very fast.







<h2 class="wp-block-heading">Web3</h2>



Blockchain and cryptoassets can be used both in centralized and decentralized way. 



The exact boundary between the two is not always clear, but usually when the core operations happen on-chain, the value is transparently distributed, and governance decisions are taken by the community, we can speak about <a href="https://d.center/en/explore/web3" class="ek-link">Web3</a>, a new era of the internet where users are in control. 



The most obvious example of web2 using blockchain vs web3 are exchanges: a centralized one like Binance is centrally managed and controls its users' cryptoassets, while a decentralized exchange like Uniswap never gets in the possession of its users' funds and evolves according to its DAO's decisions.



<h2 class="wp-block-heading">Blockchain ecosystem</h2>



Blockchain is a collective endeavor, and it needs an extensive ecosystem to function and to serve its purposes. 



Numerous products and services have therefore been developed: <a href="https://d.center/explore/crypto-wallets" class="ek-link">wallets </a>to interact with the blockchain, <a href="https://d.center/explore/crypto-exchanges" class="ek-link">exchanges</a><a href="https://d.center/explore/crypto-exchanges" class="ek-link"> </a>to buy and sell crypto, <a href="https://d.center/en/explore/oracles" class="ek-link">oracles</a> to interact with the real world and feed information to smart contracts, not to mention the miners who maintain the network, or interoperability protocols connecting different blockchains. 



<h2 class="wp-block-heading"> </h2>

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A well-developed ecosystem is crucial for the blockchain: while assuring its maintenance and specific functions it also allows people to easily use cryptocurrencies.



The blockchain is a decentralized method of storing a continuously changing ledger and registering all transactions that compose it. It is a powerful tool that has generated an entire ecosystem around it, assuring that:



<ul class="is-style-checked"><li>the blockchain network is correctly maintained (mining for PoW-based blockchains)</li><li>a user can easily connect to the blockchain, initiate and receive transactions (<a href="https://d.center/explore/crypto-wallets" class="ek-link">wallets</a>)</li><li>a user can exchange a cryptoasset against [tooltip content=" fiduciary money with no intrinsic value backed by and dependent on the government (e.g. dollars or euros) "] fiat money [/tooltip] or another cryptoasset (<a href="https://d.center/explore/crypto-exchanges" class="ek-link">exchanges</a>)</li><li>a user can spend her cryptoassets paying for a real-world product or service not yet available in crypto (crypto payment systems)</li><li>a decentralized application (DApp) working on a blockchain can get real-world information in order to be able to execute its pre-programmed sentence (oracles)</li><li>different blockchains can work together, allowing people to use the most suitable blockchain for each particular purpose and easily switch between them when needed (interoperability protocols)</li></ul>







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With all these directions developing really fast, the blockchain ecosystem becomes yet more efficient and complete, further propelling crypto adoption.

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How to secure a blockchain? Make it too expensive to hack, obliging anyone willing to add a block to execute a specific procedure called mining (in PoW blockchains)



Crypto mining is a process of finding a consensus in the <a href="https://d.center/explore/proof-of-work" class="ek-link">Proof-of-Work</a>-based blockchains, such as <a href="https://d.center/explore/bitcoin" class="ek-link">Bitcoin</a>. In order to prove their good intentions and be able to add a block, miners must find a hash of that header block’s data starting with a certain number of '0'. To produce such hash, miners add to the block header data a random number called nonce. Hashing function being a one-way function, the only way to find one with enough ‘0’ is to use the brute force and try different nonces one by one.



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Such activity implies not only paying a hefty electricity bill, but also investing in a specific hardware. However, there is a proper incentive to it too: the miner who finds the Proof-of-Work before others and therefore gains the right to add a block, can remunerate himself or herself with newly created coins (see <a href="https://d.center/explore/bitcoin-consensus-and-mining" class="ek-link">Bitcoin consensus and mining</a>). In PoW-based blockchains this is the only way of monetary creation, thus the node who "extracts" new coins is called a miner, like a gold miner.



<h2>Mining hash rate and difficulty</h2>



When mining first started, only blockchain enthusiasts would get involved in the process, but as the popularity (and valuation) of cryptocurrencies increased, many amateurs and hardware companies have also decided to give it a try. As the network grows, so does the hash rate (quantity of hashes/second executed by all the miners), and in order to keep the chances of finding a PoW stable, its difficulty increases: for example, instead of finding a hash with 6 ‘0’, a miner now must find one with 7 ‘0’. Adjusting difficulty keeps the blocktime and monetary creation speed stable (in case of Bitcoin a block is added on average every 10 minutes, whatever the network’s hashrate) .



<h2>Mining pools and mining farms</h2>



Adjusting difficulty also means that in big networks mining has become a challenging task. A single PC was not able to mine a block anymore - it just didn't’ dispose of enough computing power. So individual computers started gathering into mining pools in order to remotely combine the computational powers of their computers and, in case of a successfully mined block, share the reward after.



Others just started straight away by setting up big data centers equipped with mining-specific hardware, making mining their core business. These data centers are called mining farms and for popular blockchains like Bitcoin mining farms can be huge. These farms consume a lot of electricity, which raises ecological concerns. This consideration pushed some researchers to create alternative consensus protocols, such as <a href="https://d.center/explore/proof-of-stake" class="ek-link">PoS </a>or different versions of PBFT protocol. Others, however, acknowledge the robustness of the PoW protocol and concentrate their efforts on making it environmentally friendly. Luckily,  mining farms could be built virtually everywhere, and many of them stand near sources of renewable energy that would otherwise be wasted, reducing mining carbon footprint significantly. 



<h2>Mining hardware</h2>



As to the hardware used to mine cryptocurrencies, there have been significant improvements from personal computers’ CPU to graphic cards (GPU) to mining-specific chips (ASIC).