Crypto Carbon Emissions Challenges & Solutions

What are the crypto carbon emissions challenges and solutions? The amount and the effect of carbon emissions on the climate due to crypto transactions and mining has always been a much discussed problem.

Whether it is on the occasions of the World Earth Day or any other discussion forum on any given day anywhere, the carbon footprint left behind by crypto is one of the major concerns of the environmentalists and the governments.

Finding solutions to it and making the crypto industry and the environment more sustainable is not an easy task due to the challenges that it poses on the way.

Crypto networks, especially the Bitcoin network, consume a lot of energy to execute the complex mathematical algorithms, which, for context, is as much as the energy used by the entire country of Argentina.

Consuming about 1% of global electricity, this, in turn, generates tens of millions metric tons of Carbon Dioxide gas that is released into the air every year.

This calls for some immediate and serious actions by the crypto industry, the environmentalists, and the governments to reduce carbon emissions and conserve the environment.

This article comprises the challenges that the environmentalists face in the way and the effective solutions that can significantly reduce the ever-growing level of carbon emissions due to crypto mining and other activities related to crypto.

You will also know the importance of these actions in today’s world as well as a few answers to some commonly asked questions.

All this will enable you to know the danger the environment today is facing due to crypto transactions and mining and take necessary steps on your part accordingly.

What are the Crypto Carbon Emissions Challenges and Solutions?

What are the Crypto Carbon Emissions Challenges and Solutions

The experts say that carbon emission is a serious issue that is causing drastic effects on the environment and it warrants immediate actions and more sensitivity to reduce the carbon footprints of crypto mining and other related activities.

Good news is several crypto mining firms today have realized this fact and are taking some serious steps to fight with it.

A few of them have started looking for better ways to shift from using electrical energy for their mining operations and use power generated from sustainable and renewable sources such as solar and wind powered facilities.

On the other hand, there are a few crypto mining firms that are looking to enhance their operational efficiencies as well as use carbon offset credits henceforth to reduce carbon emissions and maintain net-zero emissions.

Ideally, carbon neutral or carbon zero operations refer to the operations where no new Carbon Dioxide gas is created.

It also signifies buying enough carbon offset credits that helps in maintaining net-zero carbon emissions.

It is good that the crypto companies now ensure that they are committed to attain net zero carbon emissions and not just appeal to the users to be more climate conscious without doing anything themselves.

It is known to all and the market experts have always talked about the energy-intensive Proof of Work or PoW mechanism that Bitcoin network and a lot of other crypto coins use for the mining purposes.

They say that this is the main cause for the increasing carbon emissions level.

Ethereum too is condemned for the same reason but the good thing is that it is seriously trying to drop the PoW mining process and build a more energy efficient consensus mechanism like Proof of Stake.

This particular mechanism is also considered to be a more sustainable version.

A lot of new crypto launched in the recent years has also taken on this responsibility of going green.

They use the PoS mechanism in an effort to make their coins much more scalable.

It makes their coins more power efficient as well in comparison to other older crypto coins available in the market now.

There are also a few other specific types of crypto coins, such as Cardano, the latest version of which comes with smart contracts capability.

This specific feature allows these coins to address real-world issues such as carbon emissions, according to the crypto watchers and experts who are extremely hopeful about these eco-friendly crypto tokens.

The market experts also suggest that climate change due to crypto mining is a harsh reality which is causing rapid global warming.

They expect to see better technologies and new updates to address this serious issue from the crypto mining industry in the years to come.

It is only meaningful actions by the industry itself that will help in achieving the target of becoming carbon neutral and comply with the Paris Climate Accord, experts also think.

It has to be a collective goal to achieve and protect the environment by bringing in new solutions and technology to it at the earliest.

And, this has already started to show. The crypto industry is doing its best to address the need of the hour and take some stern steps to reduce its carbon footprints, said the experts.

In short, the crypto industry is now emphasizing on reversing the effects of crypto mining on the climate by using the same blockchain technology.

It is the same technology that is now being used to solve the issue and not to make things worse.

Seriousness of the Problem

Bitcoin, Ethereum, and several other crypto coins have all become the buzzwords now and these are being used increasingly in everyday discussions.

However, apart from the benefits that these coins offer, there has also been a growing concern over the amazingly high environmental costs related to these coins.

This has caused the crypto industry, the environmentalists, as well as the governments to think about new designs that will make the crypto industry and the environment safer and more sustainable.

A clear commitment is required by all to use renewable energy and ensure net-zero carbon emissions.

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Now, to understand the seriousness of the climate issue due to crypto mining and other allied activities, you will first need to understand cryptocurrencies and blockchain technology, in brief.

A crypto coin, as such, is most easily understood as a type of digital currency.

It can be used in the same way as cash or credit to purchase goods and services. However, everything in the crypto space happens online.

There are lots of different types of crypto coins available now in the market but the original coin was Bitcoin, launched in 2009, and is the most widely known cryptocurrency.

All these coins are run on blockchain technology. This refers to a network of computers spread in different locations.

These computers are used to solve complex math algorithms in order to verify and record the transactions of digital assets.

This is called the crypto mining process since it creates new coins by the miners.

There is no central bank or authority to supervise crypto transactions, much unlike traditional fiat currencies like the US dollar.

All data here is well encrypted which protects the decentralized blockchain networks from scams, hacks, and counterfeiting.

Crypto coins do not have any physical form and therefore are not tangible assets like cash. It is stored in digital crypto wallets and not in your bank.

Applications of crypto are expanding though a few people are skeptical about accepting them as a reliable mode of payment.

Now you have Non-Fungible Tokens or NFTs that are increasingly used for proving ownership of real-world assets such as a piece of art, music, or videos.

Then you have the stablecoins which are tied to fiat currencies like dollar or Euro, precious metals, and even short-term securities such as money market accounts and certificates of deposits.

The use of crypto is growing and the countries supporting its use are also growing in number and the list includes major names such as the United States, Germany, Japan, and the United Arab Emirates. El Salvador is the first country to declare Bitcoin as an official legal tender in June 2021.

Crypto exchanges, Coinbase for example, have also gone public recently. And, investors and traders have also shown a lot of interest in crypto as a reliable investment class.

They buy, sell and trade them frequently, and even mine them to create new coins.

This is where things turn to be worrisome.

The excessive use of energy by crypto for transactions and mining is causing serious problems to the climate.


In order to deal with the crypto carbon emissions there are lots of challenges that are required to overcome.

It is only then proper solutions can be created to ensure more sustainability and reduce its strain on the climate.

The first and most significant challenge is to do away with the excessive amount of energy used by the crypto coins, especially Bitcoin and others that use PoW mining consensus mechanism.

The only possible ways to do it is either change the mining method from the energy-intensive PoW to more energy efficient PoS consensus protocol or use renewable energy sources to power the mining rigs.

The next significant challenge is the hardware used for mining.

Not only is the amount required is large which makes the mining process an extremely costly affair, but it also takes quite a long time for these mining rigs to process the data.

This is because every transaction needs to work its way through the entire blockchain related to it. This results in even inferior energy efficiency.

With such a huge amount of energy and time required to make one crypto transaction, several hundreds of thousands of transactions using a Visa card can be made.

Also, crypto mining firms are typically set up in countries where there are little or no environmental regulations.

This allows them to keep the cost of mining as low as possible even after consuming high amounts of energy for their operations.

The energy sectors in these countries typically have a high dependency on fossil fuels such as natural gas and coal to generate electricity.

These countries also have much smaller infrastructure to generate electricity by using renewable sources such as wind or solar power.


The only way to reduce carbon emissions is to build greener Bitcoin.

This will, in turn, reduce the cost the world has to pay for the rise in mining difficulty with the rise in the number of miners on the network.

Here are a few specific ways in which crypto can be made green, along with their pros and cons.

Changing the code:

Changing the Bitcoin code is one good option. By making some tweaks in the software behind the Bitcoin network, just as a few other Altcoins have, the effect of carbon emissions can be reduced significantly.

Pre-mined coins, for example, will prevent the race for mining new coins and using excessive amounts of computing power.

Also, there are several other coins, Ripple’s XRP for example, are not mined at all but these are created algorithmically instead.

This means that creating these coins do not need those dedicated, expensive, high-speed mining hardware.

These coins are designed to eliminate the energy issue.

Proof of Stake consensus mechanism:

Shifting to the Proof of Stake consensus algorithm from the energy intensive Proof of Work mechanism is another good way to reduce energy usage during the mining process.

In this process users are given new coins depending on how many the coins they already have and not on how much they are minting by hashing.

However, there are a few particular crypto coins that still use the Proof of Work algorithm but at least these coins try to search for prime numbers that will be useful for the researchers.

Distributing mining power:

The problem with Bitcoin is that it is not capable of making such changes and it is also not possible to have pre-mined coins.

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It will need a hard fork and the risk in it is too high and the developers are very much conservative knowing that so much business relies on it.

In theory, users should pay only for what they need.

Here ‘need’ is defined, a bit vaguely though, as ‘adequate hashing power so that the greater part of merchants do not have to worry about rollback attacks or double spending.’

Decentralized networks like Bitcoin need a specific amount of mining power to prevent people from taking control of the blockchain.

If this power is distributed, it will be better for the network on the whole.

Reducing over-mining:

Bitcoin mining is very popular and profitable which is why too many people take part in the process today which results in over-mining.

However, too much of a good thing is not good.

This may result in double spending attacks if the bad miners get hold of the blockchain and replace it with their own.

This will create new money for sure but it will also distort decision making and result in improper allocation of resources, which is excessive mining, in this case.

However, restricting the amount of mining cannot be done simply by changing the protocol simply.

Bitcoin cannot be created out of thin air and therefore cannot be done without misallocating resources and this is not easy because Bitcoin is not structural and it is finite and therefore it is due to phase it out after sometime.

The situation will get better over time but in the meantime carbon will be burnt at a rapid pace.

Imposing carbon tax:

Since carbon will be emitted and burnt both at a rapid pace, it should be made more expensive in order to reduce its emission.

The economic way to do it is by imposing a carbon tax by the government on the fuel producers.

It has already been done in a few jurisdictions.

Practically, the core developers will never directly impose any sort of environmental or carbon tax on Bitcoin mining in the software.

This will be an unpopular and unmanageable move and may even fork the chain.

Instead, they may penalize those who are not using fossil fuels to generate new Bitcoin.

Therefore, it is the government who will need to do this in order to save the environment.

Change the hardware:

With the mining difficulty rising every day, the mining operations are needed to be made more environmentally friendly.

One way to do it is by changing the GPUs or Graphic Processing Units in the mining hardware.

These GPUs are known to be infamously power-hungry and are not good enough to use for a long time for Bitcoin mining due to the rising level of mining difficulty. Therefore, it is good to switch the GPUs.

Using the ASIC or Application Specific Integrated Circuit miners for mining Bitcoin is much better since these use less power relatively to generate new coins.

You can use these machines for mining scrypt-based crypto coins as well.

However, do keep in mind that if the mining difficulty becomes very high, these machines will simply be costly paperweights.

Purchasing carbon credits:

You can purchase carbon credits in many ways in order to reduce your carbon footprint by using different types of coins.

For example, if you buy SolarCoin which underpins renewable energy credits you actually support a market that rewards the generation of solar energy when you trade them.

You can also buy another digital currency called Carboncoin which was initially a pre-mined coin with nothing to do with carbon offsets but later on was repurposed as a carbon offset initiative.

Carboncoin donations are collected and are used to fund planting of saplings in the UK and the US according to the deal with the owners of the land.

Each of these saplings planted is supposed to offset a ton of carbon.

This coin, however, works on the Proof of Work mechanism but a Proof of Stake coin will be forked at some time in the future.

You can also purchase carbon offset schemes with Bitcoin and fiat money from several suppliers out there.

Purchasing green power:

A mining rig can be installed anywhere and for its operation it can use the power that nobody wants.

And, there is a lot of power generated from renewable sources that are often unused and wasted because it is too difficult to supply them to the consumers.

However, most jurisdictions present ways to buy power from alternative energy sources and suppliers.

You can also buy renewable energy certificates or anything similar and trade them in order to reward those who are producing renewable energy.

A few analysts and market experts believe that there will be a significant increase down the lane in the use of renewable energy by the Bitcoin miners because the Bitcoin mining systems are well suited for such types of clean energy.

Using the power from a solar power project set up in the middle of a desert may not be a suitable option for any average residential Bitcoin user.

However, it is surely a more productive and profitable option for those large mining farms that run their own data centers.

If these institutional miners use the power responsibly, it is good news for the environment.

Crypto Climate Accord:

With the rise in the mining difficulty of Bitcoin and other crypto coins, the level of carbon emissions will also rise along with it.

However, there are some steps that can be taken both at the individual and institutional level to reduce it and make the environment better.

In order to motivate them and support more creative solutions, the CCA of the Crypto Climate Accord can help.

This is a private sector partnership launched in April 2021.

The main objective of this Accord is to decarbonize the crypto and blockchain industry within a specific period of time by moving to renewable power.

The CCA has more than 150 Signatories as of now.

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These corporate and individual Signatories have agreed to follow a set of objectives that are designed to reduce carbon emissions and attain net-zero emissions by using sustainable energy.

The points on which these Signatories of the Crypto Climate Accord have agreed upon include:

  • Developing tools and creating standards that will help blockchain industry in using 100% clean power by 2025
  • Achieving net-zero emissions by 2030 from their own supply of energy and
  • Reaching net-zero greenhouse gas emissions by 2040 across the entire crypto industry.

The initiatives of the CCA are also supported by the United Nations Framework Convention on Climate Change or UNFCCC who are responsible for monitoring and supporting the global response to the dangers of climate change.

Use of renewable energy:

Using renewable energy, also known as clean energy, is the key to achieving a more sustainable crypto industry and reducing the impacts of it on the climate.

In this world where everything is tied to technology that advances at a rapid pace and is linked with power generation, such a shift to renewable energy will help in a great way to achieve the goals of the Crypto Climate Accord and the UNFCCC.

This clean energy is generated from natural resources such as wind and sun and is restored and repeated continually.

For example, solar energy can be generated continually because the sun will continue to burn and provide energy which can be captured and used irrespective of bad weather conditions or cycles of darkness every day.

Some other sources of clean energy are:

  • Hydroelectricity
  • Onshore and offshore wind and
  • Geothermal energy.

Encouraging the crypto industry, including all its interconnected operations such as crypto exchange, crypto finance, and crypto development, to use renewable energy systems will effectively reduce its carbon emissions.

Whether it is Proof of Work or Proof of Stake crypto creation or verification process, a total commitment to use renewable energy will play a major role in getting rid of carbon emissions.

Carbon Credits in Voluntary Carbon Market:

Participating in VCM or Voluntary Crypto Market is a good move to start off with carbon offsets and moving to renewable energy.

Carbon offsets are created by projects that make up for the Carbon Dioxide gas that is emitted through those specific activities that cannot change to 100% renewable energy sources yet.

The carbon offset projects comprises specific strategies that are created for specific purposes such as:

  • Capturing and destroying greenhouse gases or GHG
  • Producing power from the clean energy resources or
  • Intercepting and trapping greenhouse gases and storing them.

One carbon credit is offered for every metric ton of greenhouse gases removed from the air.

You can buy, sell, and trade these carbon credits in the VCM.

The VCM is an entire industry of its own and has grown exponentially in 2021.

It has experienced a genesis of more inventive and sustainable products in several industries and markets which includes the crypto market.


Why is the huge power consumption due to crypto mining problematic?

The excessive consumption of power due to crypto mining, and even for any crypto transactions, is problematic for two particular reasons.

One, it has caused enormous damage to the climate and two, it is quite unnecessary because there are other ways to mine a new coin such as Proof of Stake which do not consume such massive amounts of energy.

What is the estimated amount of energy consumption by the Bitcoin network?

Though it is very difficult to estimate the exact amount of energy consumed by the Bitcoin network, Digiconomist estimates it to be 34 Terawatt-hours a year and Cambridge Bitcoin Energy Consumption Index says it is about 31.7 Terawatt-hours per year.

It equals the electricity of 4 nuclear reactors and the energy consumed by an entire country such as Argentina.

Are these estimates true and serious?

Well, it cannot be less and it is a serious amount. The facts and figures are not hypotheses.

These are all certainties. Few miners still use older and less efficient mining machines that need a lot of power not only to operate but to keep them cool as well.

Therefore, these estimates can be easily doubled or even tripled!

Will China’s ban on Bitcoin mining impact the climate?

Though China banned it to reduce carbon emissions in their country, it has resulted in an exodus of miners from there to more crypto friendly countries.

This has not helped the world and the climate because the emissions simply shifted their origin or location from China to other countries.

What may happen when the price of Bitcoin rises?

When the price of Bitcoin rises, it can result in re-opening of the old coal-fired power stations since there will be more miners taking part in the process which will result in a significant increase in the demand for power.

The miners will be willing to pay more for the electricity as well.

What effects will it have?

Without strong regulations and pushback from the governments it will have a significant effect on the price of electricity as well as on the environment due to increased carbon emissions.


So, as you can see from this article, a rise in Bitcoin mining activities will pose serious challenges in terms of climate change due to carbon emissions and its control.

However, everything is not bad in crypto mining since this issue can be resolved with the abovementioned solutions.