Cryptocurrencies enable a digital form of value exchange in which transactions are verified and maintained by a decentralized system using cryptography. They can be transferred between users globally without incurring additional charges from an intermediary, and a very difficult to counterfeit due to the blockchain distributed ledger.
Often labeled "dirty currency", bitcoin alone is estimated to consume as much electricity as the Netherlands, with a carbon footprint equal to New Zealand. A Bitcoin single transaction uses 2,106.37 kilowatt-hours of electricity which equals the amount of power consumed by the average American household over 72.2 days. Digiconomist estimates that the Ethereum network annually uses 99.6 Terawatt-hours of electricity more power than is required by the Philippines or Belgium. In addition, the computers consume additional energy because they generate heat and need to be kept cool.
A University of Cambridge analysis estimated that bitcoin mining consumes 121.36 terawatt-hours a year. This is more than all of Argentina consumes, or more than the consumption of Google, Apple, Facebook, and Microsoft combined. Globally, Bitcoin's power consumption has dire implications for climate change and achieving the goals of the Paris Accord because it translates into an estimated 22 to 22.9 million metric tons of CO2 emissions each year equivalent to the CO2 emissions from the energy use of 2.6 to 2.7 billion homes for one year.
With the negative impact bitcoin and other cryptocurrencies have on the environment, some projects are seeking to reduce the carbon footprint of Bitcoin and cryptocurrency in general. The Crypto Climate Accord is an initiative supported by 40 projects, to make blockchains run on 100 percent renewable energy by 2025 and have the entire cryptocurrency industry achieve net zero emissions by 2040. It aims to decarbonize blockchains through using more energy validation methods, pushing for proof of work system.
Ethereum also aims to reduce its energy use by 99.95 percent by 2022 through transitioning to an alternative validation system called proof of stake, a few smaller cryptocurrencies have done.
With a new generation of cryptocurrencies coming out, they are moving away from proof of work and moving towards proof of elapsed time, proof of burn, and proof of capacity for several reasons, one of which is the environmental impact. So it is safe to say that crypto can go green soon.