September 21, 2022 | less than a minute read

How sustainable are cryptocurrencies and digital assets?

Norton Rose Fulbright

It was fascinating talking with Alex de Vries, the founder of the cryptocurrency energy index Digiconomist, recently to talk about the sustainability of cryptocurrencies and digital assets.

Some key takeaways:

1. Empirical evidence shows the extremely high energy demands in proof of work networks, such as Bitcoin

2. Ethereum's merge to proof of stake is significant because it shows that change to more sustainable options is possible if there is a willing community

3. Decentralised systems will always be more energy consumptive than centralised systems but the trade-offs need to be weighed up.

It is also a fast evolving space and we are likely to see more research into calculating the energy consumption of proof of stake networks as well as reactions from regulators and policy makers.

The Bitcoin network itself is responsible for more carbon emissions than we are reducing by deploying electric vehicles around the world. The network would be responsible for around 70 million metric tons of carbon dioxide every year, whereas we are only saving or reducing our carbon emissions by 50 million metric tons every year from deploying electric vehicles.

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