The cryptocurrency market has become very widespread in recent years, mainly due to the Covid19 pandemic, which has encouraged people to have much free time. Currently, various cryptocurrencies are used as a payment method in many industries, and many companies are willing to provide their products with a relatively new digital currency. Being the most famous and prominent cryptocurrency, Bitcoin has enriched many people, made Internet transactions more manageable and accessible, and helped support independent and small authors and publications. Nevertheless, modern society is concerned about the impact of the cryptocurrency market’s development on the Earth’s ecological state, the growth of the shady business, and how such a speculative currency affects society’s financial situation. This blog explores these concerns in detail based on the latest current research.
The first concern has to do with the enormous environmental harm that results from the process of mining cryptocurrency. The unique distinguishing feature of the cryptocurrency market is the ability of any user to mine the currency using their electronic computing systems, which require a considerable amount of energy to operate. Using and mining Bitcoin alone generates 114 metric tons of carbon dioxide annually. Moreover, just one transaction associated with Bitcoin requires the same electricity as 79 days of operation in the average American home (Maryville, 2022). Only 35% of all energy used in the cryptocurrency market is made from renewable energy sources, although this figure may not be accurate because of the vast number of minor miners.
Let’s consider the entire cryptocurrency market’s impact on the planet’s ecology. It is worth noting that mining requires more energy than the whole of Argentina or Apple, Microsoft, and Facebook combined. Moreover, mining generates about 11.5 kilotons of electronic waste annually, which also hurts the environment (Cho, 2021). Nevertheless, despite such statistics, it is worth remembering that the conventional financial system and related monetary transactions also consume a considerable amount of energy, which is many times greater than the crypto market in terms of environmental damage estimates (Rivers, 2022). Therefore, it is tough to determine whether the cryptocurrency market is an environmental breakthrough or more dangerous to the environment. Logically, the decentralized system of the crypto market reduces the number of intermediaries, which should increase the efficiency of transactions. Still, on the other hand, the crypto market opens up opportunities for mining, which is difficult to compare with the current financial system. Consequently, one cannot argue about the exceptional harm of the crypto market development yet, nor can one deny the fact of its negative impact on the environment.
The second major problem associated with the development of cryptocurrencies is the issue of security and strengthening of the shadow economy. A considerable proportion of all transactions conducted in cryptocurrency refers to crime, which has obtained an untraceable resource to pay for resources. This problem can be directly linked to drug trafficking, slave markets, illegal arms sales, etc., negatively impacting global security (Schicler, 2022). On the other hand, the system’s transparency can be used in the future if cryptocurrencies cooperate with representatives of the law, who will find it easier to track shady businesses thanks to the system, but this is only a perspective that has not yet been introduced. Thus, increasing global crime is a direct negative consequence of crypto market development, but state regulation can correct the problem.
The cryptocurrency market’s subsequent harm is purely social because it is related to the main advantages of the crypto market. In this case, we are talking about the insecurity of users with no protection for their payments, ways to return funds, etc., and the market’s high volatility (Mint, 2022). This means that the currency’s value is very much dependent on the mood within society, which can be affected by any tweets or news. On the one hand, this allows many people to make a quick profit, but on the other hand, it hits very hard on those who decide to keep their deposits in cryptocurrency (Barth, 2020). The volatility of the market does not allow its regular evaluation. It often leads to people’s impoverishment, for example, after some tweets of Elon Musk in 2020. As a result of this incident, an entire community went bankrupt because of the businessman’s actions and announced a bounty on his head (Stuff, 2021).
Finally, the impact of cryptocurrency mining was significant on the shortage of processors and graphics cards, which appeared first because of the Covid19 pandemic and were amplified by the growing demand among miners. It is essential for people who mine cryptocurrency to have the latest and most influential technology, allowing them to compete with each other on the profitability of their businesses, which has led to several negative consequences for the industry. Many processor manufacturers are suffering losses and difficulties because of unstable demand for their products due to changing preferences of miners. For years, companies can’t close half the demand, and the next may produce many more products than the market needs (Li, 2022). That’s on the manufacturers’ side, but there are even more significant problems on the buyers’ side. The shortage of processors and chips has led to shortages in the market for new cars, phones, computers, etc., and the number of top video processors has increased in price several times in recent years, which of course, has hurt the entire industry as well as on its consumers. People have been waiting months for their PlayStation 5 orders, laptops and computers have become very expensive, and the car market has seen lines of several years for new models (Triggs, 2022).
Thus, the development of the crypto market has hit the processor industries, poses a danger to the environment, contributes to increased crime in the world, and poses a social danger to the poor and middle social classes, which count on profits when investing in cryptocurrency, whose value is almost impossible to predict. These are all significant problems associated with the development of the cryptocurrency market. Still, many have prospects for a solution, especially the problem of environmental pollution and the development of shadow businesses. Understanding these significant market problems will improve its future development vector, and maybe, in the future, cryptocurrencies will eliminate all their opposing sides.