{
  "title": "Cleaning Up Crypto",
  "sourceUrl": "https://www.imf.org/en/publications/fandd/issues/2021/09/how-to-make-cryptocurrencies-cleaner-and-greener",
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  "summary": "F&D’s Analisa R. Bala writes that Bitcoin’s carbon footprint is again making headlines, but there’s a way to make cryptocurrencies cleaner.",
  "sections": [
    {
      "heading": "Overview and context",
      "content": "- Author: ANALISA R. BALA, senior communications officer in the IMF’s Communications Department.\n- Publication: F&D Magazine, September 2021.\n- Key framing: Bitcoin’s carbon footprint is again making headlines; there is a feasible technological change that could dramatically reduce cryptocurrencies’ energy use."
    },
    {
      "heading": "Environmental footprint of Bitcoin and mining geography",
      "content": "- In October, more than 65 percent of bitcoin miners were based in China.\n- Cambridge University’s Bitcoin Electricity Consumption Index estimates miners burn about 73 terawatt-hours of electricity a year—double Denmark’s usage.\n- Bitcoin mining emits more than 64 million tons of carbon dioxide into the atmosphere annually—a carbon footprint comparable to that of Montenegro (estimate by Alex de Vries).\n- A single bitcoin transaction may emit as much carbon as more than 1.8 million Visa purchases.\n- After China’s government clampdown, many miners are relocating to countries like Iran and Kazakhstan, where electricity comes almost entirely from fossil fuels.\n- Tesla CEO Elon Musk set a condition for Tesla to accept Bitcoin payments: “when there’s confirmation of reasonable (~50 percent) clean energy usage by miners with positive future trend.”"
    },
    {
      "heading": "Claims and controversies about miners’ energy mix",
      "content": "- The Bitcoin Mining Council maintains that as much as two-thirds of miners’ energy use already comes from sustainable sources; this figure is attributed to a survey in which just 32 percent of the network participated.\n- Alex de Vries questions the survey’s scope: “It’s not clear at all what’s included in their survey,” and argues that “Countries just don’t have the capacity to supply renewable energy for mining.”\n- De Vries: miners “have no incentive to care about clean energy” and will flock to wherever electricity is cheapest and supply is stable."
    },
    {
      "heading": "Consensus mechanism alternatives and potential energy savings",
      "content": "- Bitcoin uses “proof of work”: miners solve complex puzzles; faster and more efficient miners earn more bitcoins, driving high computing and electricity demand.\n- “Proof of stake” is an alternative: validators put down a “stake” of cryptocurrency, are selected at random, and are rewarded proportionally; false attestation can result in losing the stake.\n- De Vries: moving from proof of work to proof of stake can “reduce the energy consumption by around 99.95 percent.”\n- Several blockchains use forms of proof of stake: Cardano, EOS, Polkadot, and Tezos.\n- Ethereum (the second-largest cryptocurrency by market capitalization) plans to move to proof of stake; if successful, the move could encourage others and reduce crypto’s carbon footprint."
    },
    {
      "heading": "Technical and economic constraints on shifting consensus mechanisms",
      "content": "- Designing a proof-of-stake blockchain that is scalable and preserves security and decentralization is characterized as nearly impossible—referred to as the “scalability trilemma” by Vitalik Buterin.\n- Fahad Khan (Asian Development Bank): “You can’t have the most perfect outcomes for all three characteristics. At best you can have two.”\n- Khan: “I don’t think proof of work is going away” in the case of Bitcoin.\n- John Kiff (former IMF financial sector expert): Bitcoin’s use case differs from Ethereum’s—Bitcoin aspires toward a unit of account or money, whereas Ethereum aims to replace internet third parties with decentralized applications and contracts using ether.\n\nF&D Magazine article “Cleaning Up Crypto,” ANALISA R. BALA, September 2021.\n\n---\n\n Content in this bundle\n\n- أوراق العملة\n  - أوراق العملة (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - أوراق العملة (PDF){rel=\"external\" type=\"application/pdf\"}\n- Criptomonedas menos contaminantes ● Finanzas y Desarrollo ● Septiembre de 2021\n  - Criptomonedas menos contaminantes ● Finanzas y Desarrollo ● Septiembre de 2021 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Criptomonedas menos contaminantes ● Finanzas y Desarrollo ● Septiembre de 2021 (PDF){rel=\"external\" type=\"application/pdf\"}\n- Dépolluer les cryptomonnaies\n  - Dépolluer les cryptomonnaies (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Dépolluer les cryptomonnaies (PDF){rel=\"external\" type=\"application/pdf\"}\n- Making Cryptocurrencies Cleaner and Greener - IMF F&D\n  - Making Cryptocurrencies Cleaner and Greener - IMF F&D (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Making Cryptocurrencies Cleaner and Greener - IMF F&D (PDF){rel=\"external\" type=\"application/pdf\"}\n- Повышение экологичности криптовалюты\n  - Повышение экологичности криптовалюты (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Повышение экологичности криптовалюты (PDF){rel=\"external\" type=\"application/pdf\"}\n- 让加密货币更加绿色环保 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期\n  - 让加密货币更加绿色环保 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - 让加密货币更加绿色环保 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/fandd/issues/2021/09/how-to-make-cryptocurrencies-cleaner-and-greener"
    }
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    "Authors: ANALISA R BALA",
    "Published: September 2, 2021",
    "Author: ANALISA R. BALA, senior communications officer in the IMF’s Communications Department.",
    "Publication: F&D Magazine, September 2021.",
    "Key framing: Bitcoin’s carbon footprint is again making headlines; there is a feasible technological change that could dramatically reduce cryptocurrencies’ energy use.",
    "In October, more than 65 percent of bitcoin miners were based in China.",
    "Cambridge University’s Bitcoin Electricity Consumption Index estimates miners burn about 73 terawatt-hours of electricity a year—double Denmark’s usage.",
    "Bitcoin mining emits more than 64 million tons of carbon dioxide into the atmosphere annually—a carbon footprint comparable to that of Montenegro (estimate by Alex de Vries).",
    "A single bitcoin transaction may emit as much carbon as more than 1.8 million Visa purchases.",
    "After China’s government clampdown, many miners are relocating to countries like Iran and Kazakhstan, where electricity comes almost entirely from fossil fuels.",
    "Tesla CEO Elon Musk set a condition for Tesla to accept Bitcoin payments: “when there’s confirmation of reasonable (~50 percent) clean energy usage by miners with positive future trend.”",
    "The Bitcoin Mining Council maintains that as much as two-thirds of miners’ energy use already comes from sustainable sources; this figure is attributed to a survey in which just 32 percent of the network participated.",
    "Alex de Vries questions the survey’s scope: “It’s not clear at all what’s included in their survey,” and argues that “Countries just don’t have the capacity to supply renewable energy for mining.”",
    "De Vries: miners “have no incentive to care about clean energy” and will flock to wherever electricity is cheapest and supply is stable.",
    "Bitcoin uses “proof of work”: miners solve complex puzzles; faster and more efficient miners earn more bitcoins, driving high computing and electricity demand.",
    "“Proof of stake” is an alternative: validators put down a “stake” of cryptocurrency, are selected at random, and are rewarded proportionally; false attestation can result in losing the stake.",
    "De Vries: moving from proof of work to proof of stake can “reduce the energy consumption by around 99.95 percent.”",
    "Several blockchains use forms of proof of stake: Cardano, EOS, Polkadot, and Tezos.",
    "Ethereum (the second-largest cryptocurrency by market capitalization) plans to move to proof of stake; if successful, the move could encourage others and reduce crypto’s carbon footprint.",
    "Designing a proof-of-stake blockchain that is scalable and preserves security and decentralization is characterized as nearly impossible—referred to as the “scalability trilemma” by Vitalik Buterin.",
    "Fahad Khan (Asian Development Bank): “You can’t have the most perfect outcomes for all three characteristics. At best you can have two.”",
    "Khan: “I don’t think proof of work is going away” in the case of Bitcoin.",
    "John Kiff (former IMF financial sector expert): Bitcoin’s use case differs from Ethereum’s—Bitcoin aspires toward a unit of account or money, whereas Ethereum aims to replace internet third parties with decentralized applications and contracts using ether.",
    "**أوراق العملة**",
    "**Criptomonedas menos contaminantes ● Finanzas y Desarrollo ● Septiembre de 2021**",
    "**Dépolluer les cryptomonnaies**",
    "**Making Cryptocurrencies Cleaner and Greener - IMF F&D**",
    "**Повышение экологичности криптовалюты**",
    "**让加密货币更加绿色环保 - 金融与发展 - 国际货币基金组织季刊 2021年9月号·第58卷·第3期**"
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