The Environmental Impact of Banknotes
The European Central Bank (ECB) has conducted a study on the environmental impact of using banknotes. It identified 16 categories of environmental impact, with energy efficiency being a significant concern, similar to cryptocurrency.
The Dominance of Cash Payments
Banknotes remain the most popular form of payment in the eurozone. However, the use of cash necessitates a complex physical infrastructure for production, distribution, and retirement.
Main Contributors to Environmental Footprint
According to the ECB’s report, ATMs were responsible for 37% of banknotes’ environmental footprint due to their energy consumption. Transportation accounted for 35%, while the remaining percentage was attributed to processing, paper manufacturing, authentication, and other steps.
Efforts to Reduce Environmental Impact
The ECB has been working since 2004 to minimize the environmental impact of banknotes. The energy consumption of ATMs has already decreased by 35% between 2004 and 2019 despite their increased numbers. The ECB is also exploring ways to further reduce transportation-related impact.
Cash Usage and Environmental Impact
Using the European Commission Product Environmental Footprint (PEF) methodology, the study found that each citizen in the eurozone had an average annual cash usage impact of 101 micropoints, equivalent to driving a car for 8 kilometers (4.6 miles). The average impact per EU citizen was over 1 million micropoints, which is like driving a car around the Earth twice. These calculations were based on data from 2019.
Hot Take: Banknotes and Cryptocurrency Face Similar Environmental Challenges
The ECB’s study highlights that both banknotes and cryptocurrencies like Bitcoin face energy efficiency concerns and contribute to environmental impact. While the ECB has been actively working to reduce the environmental footprint of banknotes, the crypto industry also needs to address these issues and find sustainable solutions for its operations.
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