In October 2018, the journal Nature Climate Change made headlines both inside and outside the cryptocurrency world after it published a study claiming that carbon emissions from the Bitcoin network alone in three decades could push the planet more than two degrees – the threshold set by the International Organization. The Paris Agreement. …
While several studies have since been published showing that much of the Bitcoin network is actually dependent on renewable energy, the first reports have had an impact on shaping people’s understanding of the role of cryptocurrency in the context of the global climate crisis: the planet is warming and cryptocurrencies , at least in part, guilty.
The truth is, however, that the link between cryptocurrency and climate is more complex, as global warming has implications that go beyond summer temperatures. Earlier this month, the US Futures Trading Commission released a report on the risk of climate change in the financial markets, which said: “Climate change poses a major threat to the stability of the US financial system and its ability to support the US economy.” ”
This latest report is just one of many that point to the same thing: the effects of climate change can affect human society beyond rising temperatures and changing weather patterns. Some of the potential consequences include disruptions in the food and water supply, massive refugee migrations, increased epidemics and increased regional and global instability leading to conflict.
With all this in mind, it turns out that reducing the relationship between cryptocurrencies and climate change to a one-way street where Bitcoin (BTC) affects the climate, but not the other way around, is a general simplification. So how exactly will climate change affect the use and adoption of cryptocurrencies, and what are some of the possible long-term implications?
Climate change is already affecting Bitcoin Mining
China currently controls 65% of the hash power of the bitcoin network, but as the planet continues to warm up, the risk of severe weather affecting bitcoin mining increases. In August 2019, the largest mining pool Poolin reported that the facilities were damaged by heavy rainfall and landslides. In August this year, Poolin again reported serious damage to the facilities. In fact, China has experienced the worst floods in decades this summer, and climate change has made an undeniable contribution.
According to Alejandro de la Torre, vice president of Poolin, the company’s operations were strongly affected by the harsh weather in China and the subsequent power and internet outages. “We have seen hash speeds drop from 10% to 20% during heavy rainfall,” he told the Cointelegraph, adding: “Objects that were not in the direct avalanche were also hit hard by rain for their infrastructure.”
While heavy rainfall is a natural part of China’s monsoon season, when the planet warms up, the probability and intensity of extreme rainfall increase. In fact, if global temperatures rise by 4 ° C, China will be considered the most vulnerable country in the world in terms of potential flood consequences. For every 0.5 ° C warming, the country’s annual flood loss is expected to increase by $ 60 billion.
So if this trend continues under harsh weather conditions, how will the mining sector react? De La Torre predicted that miners had no choice but to adapt to new normal and extreme weather conditions in their business:
“If this trend of severe weather continues, the risk factors for mining operators should reflect this. This in turn can make things like insurance more expensive. Alternatively, operators may need to spend more time and effort choosing the right location for their farms, and increasing costs. Their original design. ”
Regional instability has worsened
Among the not much discussed consequences of climate change is how they can affect regional and global stability, and then influence government decisions. But societies are complex, and it is difficult, if not impossible, to say that a particular event is directly caused by climate change.