With a single bitcoin transaction now consuming as much energy as a round-trip transatlantic flight from London to New York, newer, more energy efficient cryptocurrencies can't come soon enough.
The new record for energy consumption was called out by the industry tracker, Digiconomist and highlights just how energy intensive the most widely traded cryptocurrency currently is.
It also underscores just how desperately cryptocurrency proponents need to move to less energy intensive networks if they want to avoid scrutiny from regulators increasingly looking for ways to reduce energy consumption as a response to geopolitical tensions and threats from increased global warming.
Some companies are trying to deal with bitcoin's sky-high emissions profile by using renewable energy to mine for cryptocurrencies, but the bulk of bitcoin mining is still handled by fossil fuels.
In fact, after China banned cryptocurrency mining in the country, the percentage of renewables used to process transactions through the cryptocurrency network actually fell, according to an analysis from the Digiconomist published in the energy publication, Joule.
The share of renewables powering the bitcoin mining network fell from 41.6% to 25.1% since miners were booted from China.
In the U.S. some bitcoin miners have even restarted operations at coal power plants that had been previously closed.
Not everyone is adding to greenhouse gas emissions with their new mining operations. The startup Crusoe Energy takes natural gas wells that would otherwise be abandoned or would burn their gas and uses the waste fuel to power data centers and bitcoin mining operations.
Gryphon Digital Mining uses carbon offsets, renewable energy, and hosting services from a provider that sources from renewable energy generation to reach net-zero in its own operations, but even that creates problems. The world needs to reduce greenhouse gas emissions, not just balance them out with offsets.
And renewables that are used for crypto mining mean that grid operators need to turn to other sources of energy to provide electricity to consumers and businesses that could otherwise have tapped into green energy.
“If you put green energy into bitcoin miners you need to up your fossil-fuel imports,” Alex de Vries said in a November interview with The Wall Street Journal. “You’re just displacing the problem.”
Some cryptocurrencies are addressing this energy intensity problem by moving from the proof-of-work transaction verification technology to a proof-of-stake verification.
Mining bitcoin requires the completion of complicated problem sets that demand incredible amounts of computing power. That's where the energy intensity comes from.
The proof-of-stake system just requires would-be verifiers of transactions -- the way to obtain more currency in a trust-less economic system is to verify other transactions -- to put up some amount of currency to be considered as validators on the network.
That's what Ethereum, the world's second most valuable cryptocurrency is now attempting to do. With an energy footprint that nearly rivals bitcoin, Ethereum's developers are working to slash its energy consumption.
The move is a risky one for the project. Tens of billions of dollars are currently transacted over the Ethereum protocol or through various forks. The wildly popular NFT platforms that have captured the public imagination are mostly bought and sold on Ethereum-based protocols.
There are alternatives to these massively emitting protocols. Algorand, Cosmos, Tezos, Cardano, and Powerledger are all cryptocurrency platforms that use less energy than bitcoin or Ethereum. For a full list check out Leafscore.
Other projects are focused on linking financial operations to carbon emissions reduction by tying cryptocurrencies to real-world offset assets. These regenerative finance projects from folks like the Regen Network, Toucan protocol, Nori, and KlimaDAO are all trying to tie cryptocurrency investment to sustainability in novel ways.
The problem, as always, is the verification and monitoring of these offset assets. The crypto projects claim that the ability to audit all of the transactions and underlying data through the immutable ledgers of blockchains make it easier for people to know exactly how valuable the offsets are.
"The kinks are still getting worked out and there are still scams and stuff. The fundamentals are coming together and the energy usage is being addressed," said BasinDAO founder Thomas Morgan, in a January interview. "[For instance] IXO on the Cosmos interchange are working to have a net-negative protocol. It will sequester more carbon than the blockchain creates."
Moving forward, Morgan sees more attempts to reduce energy intensity coming across multiple blockchain protocols. "Algorithmically or computationally the proof of stake and proof of authority blockchains are going to make it so that energy is not an issue," he said.
On the positive side, Morgan said that these protocols can be used to get nature-based offset solutions launched much more quickly than using traditional methods.
"If you want to get a carbon project off the ground right now it takes one to three years and you have to work through their methodologies which are rightfully scrutinized and run through academic and peer reviewed," Morgan said. "There are three to six providers on … .new protocols on the Regen Network or the Open Forest Protocol… projects like that are going to work with the existing methodologies, but they’re open to create their own methodologies… [and] create opportunities to solve the climate crisis faster."