In Our Opinion: Understanding the complex world of cryptocurrency is vital

There’s a modern-day gold rush happening right now, but it isn’t nearly as simple as panning water in the hills of Dakota. It’s called cryptocurrency and its impact is being felt not only in the global financial markets, but on the Earth itself.

The problem is that the very idea of cryptocurrency is one that’s vague and confusing to many people. But given the ripple effects it’s been producing and will continue to produce, it’s important to become familiar with it, regardless of whether or not you see it as a positive or negative.

Cryptocurrency is a digital currency, an alternative form of payment created by using encryption algorithms. The use of these technologies means that cryptocurrencies serve as currency of their own and as a virtual accounting system.

Cryptocurrencies can only be used by having a cryptocurrency wallet. Rather than something physical that you can put in your pocket, these wallets are instead software that can be stored on a computer or mobile device. They are used to store encryption keys that allow users to access their funds.

Some of the more well-known types of cryptocurrencies, especially Bitcoin, have become more and more popular as alternative methods for online payments.

Cryptocurrencies are still relatively new and therefore more volatile and risky than their traditional counterparts. Because they don’t require regulation from a bank or any other third party, they are often uninsured and difficult to convert into a standard, tangible currency such as U.S. dollars.

Because cryptocurrencies are intangible assets, they can be hacked like any other technological asset that’s stored on an electronic device. Additionally, if you lose your crypto wallet, you will lose your entire investment.

The dangers of cryptocurrency have been made apparent thanks to incidents like the 2022 bankruptcy of the FTX crypto exchange that cost customers $8 billion and landed founder Sam Bankman-Fried in prison for 25 years.

Bitcoin was the first cryptocurrency and was launched back in 2009, but it has seen its value skyrocket in recent years, especially in the wake of Donald Trump’s re-election. The thinking behind this surge has been that as more people use cryptocurrencies, they will become more stable.

Last week, a cryptocurrency plant in central New York was given the OK to continue operations after there were concerns on behalf of the state with regard to the climate impact of the plant.

Greenidge Generation, a large-scale crypto mine, has drawn criticism from environmental groups since it began mining four years ago.

Like other crypto-mining operations of such size, Greenidge uses thousands of computer servers that consume huge quantities of electricity to solve the complex equations vital to its process. To power those servers, it uses a former coal-burning plant — now powered by natural gas — that pumps millions of pounds of carbon dioxide into the air while also contaminating nearby Seneca Lake with discharges of heated water.

This is not an isolated incident. Bitcoin mining activities around the world have produced significant carbon, water and land footprints.

A study by the United Nations University and Earth’s Future found that between 2020 and 2021, 173.42 terawatt hours of electricity were consumed by Bitcoin mining globally. That would be enough to rank Bitcoin as a nation unto itself in the top 30 in the world in such consumption.

The carbon footprint was equivalent to that of burning 84 billion pounds of coal; to offset this footprint, almost 4 billion trees would need to be planted.

Bitcoin’s water footprint, meanwhile, was roughly the same as the amount of water it would take to fill 660,000 Olympic-sized swimming pools.

The Greenidge site was seen as a test case for New York state’s ability to enforce climate laws and it could become even more difficult in the wake of Trump’s re-election, as the soon-to-be president has received billions of dollars from the crypto industry.

It’s becoming apparent which groups are benefiting from cryptocurrency mining and which nations will suffer from its environmental consequences. To prevent these inequities, it’s vital that people educate themselves about the nature of this complex industry and the impact it will have in the months and years to come.