Despite its noble background, blockchain has reached a critical mass of complaints about its sustainability issue. Although surrounded by virtuous intentions to upend the status quo and offer an alternative to an unjust global financial system controlled by central banks and politicians, blockchain is facing severe criticism from environmental proponents for its high energy use.
Blockchain is touted as, and indeed has the potential to build a fairer and more sustainable world through more equitable banking. However, human greed for instant riches and the commercial capacity to use any financial instrument as a be-all-end-all method to earn and exploit markets to fill their coffers.
Blockchain’s mining, and especially Bitcoin mining under the Proof of Work (PoW) consensus algorithm, has been scandalously making rounds in the news for its insatiable appetite for electrical energy. This bad juju is making a mockery out of its good intentions.
Blockchain was meant to be a powerful tool for driving social impact and holds the potential to be a trustless solution that is both fair and watchful with its capability to be auditable for all transactions conducted on its chain.
The blockchain was designed with equity in mind, with the thought that anyone devoting their computer’s processor would have an equal stake in the spoils it generated. However, the emergence of mining rigs (computers that process mathematical problems posed in mining) and entire power plants dedicated to electrical production for Bitcoin mining have soured the lofty ambitions of its founders.
Blockchain’s ingrained ethos of stake equity propels value creation through participation. With this core, blockchain is a truly powerful technology that could perhaps upend or at least realign capitalism.
We have an urgent need to reduce fossil fuel consumption, and blockchain is quickly reaching the pinnacle of world energy users. It is rapidly on its way to being an entity that single-handedly wastes 1% of the total electrical power supply of the world. It’s high time we admit the flaw and fix it.
Blockchain’s exorbitant energy use has also caused bad state actors to find lucrative means through Bitcoin mining to fund illicit activities undetected. Today, roughly 70% of blockchain mining is carried out between mining farms in China, Russia, and Iran that either subsidize electricity or tacitly run state-owned operations that run around the clock producing riches for a mainstream market dreaming of cashing in before the jig is up. According to a recent report, “around 4.5 percent of global Bitcoin mining takes place in Iran, allowing the country to earn hundreds of millions of dollars in cryptocurrencies that can be used to “purchase imports and bypass sanctions.”
Aside from dodging international sanctions, Iran’s local population is suffering the impact of dirty energy it creates to power these giant mining operations. Another report exposes how blockchain mining operations “… have forced power companies to switch to using highly polluting fuel oil — called “Mazut” in Persian — to generate electricity, contributing to already high levels of urban pollution in Iranian cities.”
In conclusion, both blockchain and Bitcoin are remarkable solutions whose application was meant to create equitable systems to curtail the inequities capitalism and other economic systems are plagued with. However, these radical social enterprises are in part and increasingly responsible for a climate crisis that needs an urgent and sustainable fix.