While still seeming strange and unofficial to many, cryptocurrencies have now become an established part of the world economy. These blockchain-based virtual currencies have become hugely popular for a wide variety of people around the world, from mom and pop investors to billionaires such as Elon Musk, who recently began accepting Bitcoin as payment for vehicles from his electric automaker Tesla. While the rise of cryptocurrencies fits well with the digitization of almost everything in our modern world, the virtual currencies have shown a dirty side through their rampant energy consumption that is beginning to become a real threat to climate change efforts.

The largest cryptocurrency, Bitcoin, is estimated to consume 148 terawatt-hours of electricity alone, which is more energy than the entire consumption of significantly-sized countries like the Netherlands, Argentina, Poland, or Switzerland. In a recent interview with the New York Times, Bill Gates claimed that Bitcoin "uses more electricity per transaction than any other method known to mankind". The Billionaire philanthropist called himself a "bitcoin skeptic" saying "it's not a great climate thing".

Despite the lack of any physical characteristics of virtual currencies, the main energy-consuming elements are cryptocurrency storage and mining. Storage is represented by the increasingly significant space that cryptocurrencies command on servers in energy-intensive data centers. Mining is where specialized computers are connected to the cryptocurrency network to solve complex mathematical algorithms. This process verifies transactions, preventing the global record from being edited fraudulently. As a reward, these miners receive a small amount of the cryptocurrency.

"The huge and ever-growing amount of energy needed to run Bitcoin is largely down to the particular technology used to maintain this digital currency, but it also points to a wider challenge for the future of the internet," says Greenpeace USA Media director, Travis Nichols. “The internet has the potential to serve as a critical foundation for sustainable economic growth, but its expansion needs to be powered by clean energy sources.”

Currently, an estimated 65% of global bitcoin mining takes place in China, where miners can take advantage of the relatively cheap electricity offered by the country’s coal dominated power generation. Emissions from mining coins in China are expected to peak in 2024, releasing as much carbon dioxide into the atmosphere as all of Italy, according to a study published in Nature Communications. As cryptocurrencies continue to grow in number and size, the virtual currencies are presenting a real threat to our efforts to slow climate change and reduce the existential threat of global warming.

A green revolution of cryptocurrencies has been emerging, however, centered around the green power supplies of Europe’s Nordic countries, but the rampant electricity demand of the virtual currencies is even challenging Scandinavian energy abundance. Iceland has been the pioneer of green cryptocurrency mining with its wealth of geothermal and hydroelectric resources. Until four years ago, Iceland hosted as much as 8% of global Bitcoin production, the nation’s Blockchain foundation said, but that figure is now down to less than 2% as the cryptocurrencies place huge strain on Iceland’s power grid. The same is true for Norway and Sweden.

“There could be very little excess energy in 2021 and 2022, because of the climate issues we see a lot of very interesting segments that are growing rapidly, and several of them need electricity,” said Hordur Arnarson, CEO at Landsvirkjun, Iceland’s national utility company.

“Bitcoin mining is problematic as it leads to an almost infinitely increasing energy demand,” said Espen Barth Eide, the Norwegian Labor party’s leading energy lawmaker. “It will displace other far more productive industries.”

While shifting the energy supply of power-hungry cryptocurrencies to renewable energy generation is an ideal solution, the rapid growth of virtual currencies demands that we tackle the problem from both sides by also reducing demand. Data centers and specialized cryptocurrency mining facilities are essentially rooms full of computers and therefore require significant cooling systems for the protection and proper functioning of their equipment. These facilities and their power-hungry cooling systems can significantly reduce their energy consumption by applying a range of smart building technologies and approaches.

It is estimated that around 25% of data center power goes directly to cooling systems, which involves multiple components such as ventilation systems, cooling towers, chillers, and other equipment that can be made more efficient. These computing facilities already include huge numbers of sensors that ensure every server stays within a safe operating temperature to avoid drops in performance or, in the extreme, catastrophic failure. All the data produced by those building sensors is now presenting the opportunity to apply advanced artificial intelligence (AI) and machine learning (ML) systems to better optimize for energy efficiency.

“The data center market already consumes vast amounts of electricity, with some estimates putting overall consumption at around 2% of global demand. With the ever-growing proliferation of traditional internet traffic, IoT-driven traffic, and cryptocurrencies set to continue, data center operators are constantly on the hunt for new ways to improve their operational efficiency,” reads our new report - AI & Machine Learning in Smart Commercial Buildings. “Data centers today are increasingly using ML to improve energy efficiency via the same kinds of automated and supervisory control methods used on other smart buildings.”

Google has been a pioneer for the use of AI and ML in its own data centers, reporting the ability to reduce the electricity demand for data center cooling systems by 40%. More recent analysis from Schneider Electric’s Data Center Science Center estimates that typical data center’s physical infrastructure energy losses can be cut by 80% using AI and ML approaches. While striving for a greener power supply for cryptocurrencies is a necessary goal to reduce their climate change impact, we must not overlook our ability to reduce the energy demand of these virtual currencies using our rapidly evolving and increasingly intelligent smart building systems.