One of the hottest topics and truly passionate debates right now in the cryptocurrency industry centers around the legitimate questions and the legitimate concerns that many folks have about the impact of crypto on the environment. Questions and concerns that center on whether all the electrical energy consumption that the industry now requires for legacy blockchains like Bitcoin and Ethereum is having a negative impact on the environment. As you probably know, Bitcoin, Ethereum and other Proof of Work blockchains require that sophisticated computer hardware be constantly operated by crypto miners, miners who then by default must therefore consume electricity to solve the vast computation puzzles at the core of these blockchain networks.
At Rubicon Crypto, we agree that these are timely and important questions to ask, and we believe it is a fundamental debate that everyone should engage in. However, it is also our position that a common sense, pragmatic approach that is devoid of all the emotion and hyperbole that is currently exhibited from the various camps, is the only productive way to tackle a subject of this significance. So, let us now state the obvious: of course, the cryptocurrency industry consumes a meaningful portion of electrical energy, and, yes, the amount of electrical energy consumption by the industry has grown exponentially over the past decade. But, in order to remain balanced, also remember that many other legacy industries also consume massive amounts of energy, consumption that dwarfs the crypto industries at a level of magnitude that makes crypto's consumption seem like a rounding error. The best question then to be asking about PoW blockchains and their true impact on the environment is whether or not they are disproportionately harmful.
Again, this is not a simple topic, it is nuanced, and, as such it requires all interested parties to dig deeper than the surface layer and the endless talking points of this debate that are literally shouted about in the realms of traditional and social media. Perhaps the best place to start is to better understand how we consume electrical energy in the first place. Where it's consumed, when it's consumed and, lest we forget, where it comes from. For example, it's less commonly known that many, not all, but many of the crypto miners and mining pools that are actively functioning today consume much of their electricity "off-peak". Why does that matter and why is that so important you ask? Because having a robust and growing industry that is capable of consuming electricity off-peak is actually viewed by many conservation activists and energy researchers as helpful to the environment. Yes, I said "helpful". Far too often we waste energy that has already been generated and then not used in off-peak hours. Another nuance to inform this environmental debate speaks to the migration in the blockchain development community away from the original, electrical energy intensive proof of work chains, to what is referred to as Proof of Stake (PoS). There will be a more in-depth examination of PoS in a separate post, but for now, know that PoS blockchains require a fraction of the energy to maintain and operate their various ecosystems. That march to POS, in and of itself, will do much to curb the consumption of power within the industry. Another dimension to this issue that we would ask people to keep in mind is that the cryptocurrency industry is actually consuming energy from renewable sources at a much higher degree than virtually any other legacy or emerging industry. Yes, I know there is some fine print on that last assertion as some nations, most notably China, are most definitely not mining cryptocurrency with renewables. That said, there are more and more responsible crypto mining players that are going out of their way to lead by example with respect to renewables. The last significant element to this debate that we think about at Rubicon Crypto concerning the environmental impact of the industry is a reminder that this industry is still just in its relative infancy. Yes, there is much, much room for improvement in terms of energy efficiency, but we believe that the same entrepreneurial spirit that has found its way into the computer engineering aspects of the technology is increasingly over time going to find its way into helping the broader industry become more efficient consumers of electrical energy.
Remember whether or not you're crossing the digital divide with Rubicon Crypto…do so with common sense and with rational exuberance.