50 Years of Earth Day: A Look at the Sustainability of Currency
As this year marks the 50th anniversary of Earth Day, it’s a perfect time to take stock of just how sustainable everyday practices and items in our lives truly are. While not as dire as melting polar ice caps or fracking, the production and use of currency does carry with it some surprising environmental ramifications.
From paper to plastic to crypto, let’s take a brief look at the sustainability of currency and its impact on our planet.
How Sustainable Is Paper Money?
The old adage is that money doesn’t grow on trees, but paper banknotes are most certainly a byproduct of them.
According to the World Wildlife Fund, mills across the world produce 400 million tons of paper each year. Some of this paper is used in the printing of banknotes, which contributes to global deforestation. It’s estimated that deforestation is responsible for about 12% of all greenhouse gas emissions.
The printing of paper money carries a rather sizable environmental impact, but it doesn’t stop at the printing press. Greenbacks aren’t particularly durable, weathering damage easily which mandates them being taken out of circulation. In fact, it’s estimated that the average lifespan of a $5 bill is only 16 months.
Many countries have transitioned to producing their banknotes with a combination of recycled, low-quality waste fibers, cotton, linen and paper. This reduces the harvesting of raw materials required to make paper money. And paper itself is an easily recyclable substance.
You also need to factor in that using paper money results in another environmentally problematic byproduct: coins. The extraction, mining, milling and smelting of metal to produce coins is incredibly energy-intensive, and the U.S. Mint estimates that some 40,000+ tons of metal are used to make coins in the country, each year.
Whether paper or metal, it’s clear that the use of physical currency is taxing on the environment and results in unsustainable practices and consequences.
How Sustainable Are Debit and Credit cards?
If paper money is that environmentally troublesome, you’re probably thinking that debit and credit cards are even worse. After all, they’re made with plastic and there’s a societal and environmental push to transition away from plastic and replace it with paper counterparts (looking at you, straws!).
But in actuality, debit and credit cards have their pros and cons as alternative payment options that don’t necessarily make them any better or worse than paper money, sustainably speaking.
Most credit and debit cards are made using polyvinyl chloride (PVC) which, like many plastics, is produced with large amounts of oil—and isn’t exactly recyclable. To manufacture one credit card, it takes around 4.25 grams of petroleum. And with current estimates of 2.8 billion credit cards in use globally, that equates to roughly 79,000 barrels of oil to produce credit cards each year. This figure doesn’t even include the production of similar plastic-based currency like gift and discount cards.
However, unlike paper money, plastic cards have longer shelf-life—they can last for up to eight years, pending the expiration date of their usage. On top of that, the harvesting and cultivation of a kilogram of cotton used in the production of paper money requires just as much energy as it would take to produce an equal amount of PVC.
How Sustainable Is Cryptocurrency?
Will the growth of crypto improve the sustainability of currency production and use? That depends on what kind of cryptocurrency you’re talking about.
The production and use of cryptocurrencies like Bitcoin and Ethereum require a process called cryptomining, where transactions for these cryptocurrencies are verified and added into the blockchain digital ledger. It represents a crucial component of the development and maintenance of these cryptocurrencies, but requires large amounts of electricity and energy to do so.
A study conducted by Stanford and the University of Stockholm on the carbon footprint of cryptocurrencies and Visa found that Bitcoin and Ethereum were two of the most eco-unfriendly currencies available in terms of annual electricity consumption.
In fact, the same amount of electricity it would take to execute 220 million Bitcoin transactions a year (its hypothetical maximum per annum) could also power 149 million light bulbs.
XRP is an example of a cryptocurrency that isn’t dependent on this massive amount of energy, easily claiming the title of one of the most sustainable forms of currency available.
The Sustainability of XRP
Unlike Bitcoin or Ethereum, XRP is not a mined digital asset. Every unit of currency that exists now has already been created. Because Bitcoin is mined, that means new bitcoins are constantly being created by huge data processing centers. As noted, this demands large, unsustainable amounts of electricity—the cost of producing one coin could power almost four U.S. homes for a day.
In contrast, XRP is an incredibly efficient and sustainable form of currency. To bring it into perspective using the previous lightbulb example, the energy consumed by XRP’s distributed ledger would power a mere seven lightbulbs. That’s a much lower carbon footprint than other currency options available, crypto or otherwise. Traditional currency continues to play a vital role in many economies around the world, though the environmental impact of these currencies is hard to ignore.
Learn more about XRP here.