India’s effort to combat the second wave of Covid-19 using cryptocurrencies seems to be at a crossroads. The setting up of the country’s first crypto relief fund has triggered a new debate over climate change.
Experts have pointed out that as cryptocurrencies become increasingly mainstream, their backend financial infrastructure will start having a noticeable impact on carbon footprint.
Bitcoin mining, for example, leaves an annual carbon footprint almost equivalent to that of Mumbai. The Indian Express quoted a study by Alex de Vries, a Dutch economist, which shows that Bitcoins leave behind a carbon footprint of 38.10 Mt a year. Mumbai’s yearly carbon footprint stands at 32 Mt.
This was recently backed by Tesla CEO Elon Musk. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” he tweeted last Wednesday.
However, it is not just Bitcoin that contributes to excessive energy consumption.
Ethereum, the second-largest blockchain, has a carbon footprint of about 22 million metric tonnes, equivalent to that of Lebanon. Its electricity use is also as high as that of Hong Kong.
Bitcoin and Ethereum together make up almost 90 percent of the annual electricity usage of all coins. according to a report by Al-Jazeera.
Russian-Canadian cryptocurrency Ethereum co-founder Vitalik Buterin recently announced to donate cryptocurrency worth USD 1 billion to support Covid-19 relief work in India.
Dogecoin, the cryptocurrency that went from a meme coin to hot property in months, also uses annual electricity as much as all of Zimbabwe.
These coins are mined through a mechanism named, proof-of-work that requires thousands of computers working together to solve a complex math problem in a race to verify transactions.
The increasing demand for cryptocurrency only means further competition and higher energy use among mining operators. According to a report by TechCrunch, during the second half of February, electricity consumption for Bitcoin mining in the United States increased by more than 163 per cent, as the price skyrocketed.
Discussions as part of the Crypto Climate Accord revealed that while 76 per cent of hashers claim they are using renewable energy, only 39% per cent of mining’s total energy consumption comes from renewables.
Back home, Sandeep Nailwal, co-founder of Polygon, has taken up the responsibility of transparency, funds usage and regulatory compliance of the crypto covid relief fund.
Country’s Covid Relief Fund has now easily accessible details of the current crypto holdings, crypto to bank and bank to grants.
The relief fund currently accepts donations in the form of cryptocurrencies which include Ethereum, Ripple, Litecoin, Solana, Tezos, Cosmos, Dogecoin, etc.
On April 28, Nailwal announced about the money pouring into the account and by April 30, the fund transferred USD 999,900 or Rs 7.4 crore to ACT Grants, which aims to provide oxygen for everyone with over 50,000 oxygen concentrators.
More than 223 Indians have died due to lack of oxygen. For several weeks, one of the most pressing concerns has been a shortage of medical oxygen. Patients, NGOs, even hospitals have used social media to sound SOS calls. High Courts have heard several petitions by hospitals and state governments for provision of adequate oxygen supply.
It is ironic how, on one hand, cryptos are helping supply oxygen and on the other causing potential climate change.
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