‘Cryptocurrency vs Traditional Money: An Environmental Comparison’
Unless you’re directly investing your money in carbon reduction systems or projects, it’s most likely that each time you spend money, you are increasing your carbon footprint. When you buy something from the internet, think of the process of events to make delivery possible, when you buy a tomato in your local shop, think of its supply chain and not only how it got to your shop, but the energy taken to grow it. Every action you make with your money causes a domino effect, and the file tile is carbon emission.
This is true for traditional currencies, like the dollar, pound or euro, but is it also true for cryptocurrency? In this article, we are going to try and find out.
Bitcoin vs the £
Wealth equals responsibility. The richest people in the world have the highest carbon footprint. In cryptocurrency terms, the biggest miners in the world have the largest ecological footprints due to energy consumption. The things you spend money on directly have a carbon value, but for crypto it’s harder to measure, as it’s all to do with processing transactions. One Bitcoin transaction could power an LED bulb for 500 hours.
In the real world, the most carbon negative way to spend your pounds are on budget flights, which many of us are guilty of. In the crypto world, the most carbon negative activity you can do is to mine Bitcoin. In truth, we should be looking to move away from Bitcoin, and support alternative technologies like IOTA that can be carbon neutral innovation tools.
Cost of printing
Central printing facilities don’t often release the figures on their activities. They may say the cost of materials, but they won’t say how much has been released, or, they may release statistics over a long period of time so that short-term data cannot be extracted. For this reason, the cost of printing comes with limited information. What we do know is that financial experts in the UK estimate that the new £5 notes cost about 3p each to produce. We also know that the government spent £75 million producing these notes, so if we assume that the entire £75m is absorbed by production, that makes £2.475 billion split in 495 million separate notes.
The new UK £5 weighs 0.7 grams (the paper notes are 0.9g), that gives us 346.5 tonnes of plastic notes. The notes will last 2.5 times longer, but cost 50% more to make than paper notes, meaning overall there are definitely benefits to this transition. However, transitioning equipment like ATMs and self-service checkouts will cost the British consumer £236 million, or about £4 each, so that’s something to consider too.
What is the environmental harm done by producing 346.5 tonnes of plastic banknotes, the energy required, the distribution, the machinery, the changes to technology and the energy required for people to go and exchange their old notes? Well, we don’t know for sure but it’s pretty large. If anyone has the formula for calculating this we’d love to know, just email email@example.com
What if ATMs were a thing of the past
The mobile and digital payment technology, wireless transactions and cryptocurrencies payments accepted in more and more places, it seems like cash is on its way to becoming obsolete. Whilst cash is redundant for some, it does play an important role in society, especially for small businesses who work on a cash basis.
In Europe, on average, the number of ATMs is declining by 6% each year since 2010, according to Link, the network that connects most of the UK’s cash machines.
However, the decline in ATM usage is actually threatening bank branches, who are not needed as much, due to online and mobile banking, as well as the lessening use of cash. In theory, if the branches continue to close, they may, in fact, start improving ATMs and making them smarter, automating the processes that in-branch staff usually provide.
There’s both the potential for a world without ATMs, or a world in which ATMs do far more than just dispense cash. As it stands, we don’t know which way it will go. What we do know is that the carbon footprint and environmental damage done by banks would be a lot lower if they had fewer branches, more Smart ATMs and the ability to offer services linked to Cryptocurrencies.
Did you know? In Russia, deposits by security vans delivering cash to stock up machines have been cut in half by allowing customers to deposit money into their accounts via ATM. The environmental impact of halving all of these road miles is considerable.
What would a world with Crypto-cards look like?
Already there are companies like Monaco and BitPay Card offering cards that hold both traditional and cryptocurrencies. With Monaco, the accounts are free, offer exchanges at fair prices and even give 2% cashback of MCO, their own token, on crypto transactions. With this service, you are able to avoid bank fees (hooray), get real exchange rates (woop) and make instant exchanges and transfers (awesome).
The current crypto-sphere is far more accessible for people who want to save or trade, and a bit more confusing or frustrating for those who want to spend. Even VISA, the leading global payment solution put a blanket ban over crypto-cards, assumedly until there is more knowledge and legislation in place about their usage.
A world with crypto-cards might look very similar to the world we live in today. Cash withdrawals, contactless payment, and chip and pin services could all feature. Additional benefits could be that your mining activities are linked to your account, and so a regular stream of coin tops up your ‘bank’ balance.
Ultimately, does spending crypto have a smaller carbon footprint than cash?
The answer to this question lies solely in the crypto that you are using. If the token is Bitcoin, it’s likely that the environmental footprint is greater than traditional money. If it’s Ethereum you’re spending, the power consumption for transactions is just 8% of that for Bitcoin, though Bitcoin is worth around 10 times Ethereum, so it almost balances out. Litecoin also uses about 1/10th the power of Bitcoin for transactions (though you’d need around 60 litecoins* to equal one BTC).
*Cryptocurrency values are highly volatile and the figures stated in this article are liable to change
Bonus: Do you like talking about money? We interviewed a crypto-millionare on the podcast. https://www.cryptopulse.co.uk/episode-12/Listen here.