What is crypto mining and how do they affect carbon footprint?

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 What is crypto mining and how do they affect carbon footprint?
Image source: Wit Olszewski,Shutterstock


  • Miners mine the crypto coins from virtual rigs using codes through a mathematical process.
  • A traditional banking institution's activities are governed by a centralized agency, whereas such an organization does not monitor cryptocurrency transactions.
  • Miners use powerful computers to solve complex mathematical equations in the mining process, which is highly energy consuming.

Crypto coins do not have a physical existence. Instead, it is a digital or virtual currency. Furthermore, unlike banknotes, cryptocurrencies are decentralized, i.e., they are not issued or controlled by any centralized agency. So, it makes them independent from any government interference.

But before jumping into the topic of how crypto coins are mined, it is essential to know the centralized and decentralized systems? The operations of the traditional banks are part of the centralized system, whereas crypto or virtual coins are part of a decentralized system.

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Centralized System:

All the activities of the traditional banks are governed by a centralized ledger, meaning all the banking transactions are recorded and verified by a centralized authority. Also, the centralized systems are restricted and closely regulated, allowing authorized officials to monitor all transactions.

Decentralized Systems:

On the other hand, cryptocurrency transactions are not scrutinized by a centralized agency. It is because the transactions are executed through a decentralized system known as the blockchain. As a result, anyone can participate in the crypto market and make transactions without going to the banks. For this reason, cryptocurrency is also known as a decentralized digital currency.

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What is crypto mining?

In general, there are no physical mining sites to produce crypto coins. Instead, miners mine the coins from virtual rigs using codes through a mathematical process. They use different hardware and software in the mining process, typically laborious, costly, and offers minimal or irregular rewards. However, various new-gen tech experts have shown interest in crypto mining.

The miners are rewarded with coins or investments for their effort. They develop blocks for the exchanges and accordingly affix a value to the blockchain. However, there are two basic requirements to start crypto mining: a GPU and an application-specific integrated circuit (ASIC).

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How does crypto mining affect the environment?

Miners use powerful computers to solve complex mathematical equations in the mining process, which is highly energy consuming. In most cases, the process depends on fossil fuels, mainly coal.

According to an expert, the amount of energy bitcoin uses annually could equal the total energy consumed by Switzerland in a year. Therefore, Bitcoin’s carbon footprint could be significantly high.

Another expert estimated that Bitcoin's power consumption could be around 77.78 terawatt-hours.

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Bottom Line:

Thus, besides the environmental concerns, crypto miners and investors should be mindful of the risks involved in the crypto trade, such as online hacks, before investing.

For instance, a miner may spend a considerable sum of money to buy the mining devices, but the return may be minuscule. However, the spending could be greatly reduced if a miner joins a mining community to combine the resources for maximum benefit.

In addition, it is also essential to do thorough research about the domiciled country or region before investing in crypto mining because crypto trade or mining may be illegal in some countries.


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