Cryptocurrency's environmental footprint stems primarily from the energy required to secure blockchain networks and process transactions. Different cryptocurrencies use vastly different consensus mechanisms, resulting in energy consumption that varies by up to a million-fold between networks.

Proof of Work (PoW) cryptocurrencies like Bitcoin require massive computational power to mine new blocks and validate transactions. Bitcoin alone consumes more electricity annually than entire countries like Argentina or Norway. Each Bitcoin transaction uses approximately 707 kWh—enough to power an average US home for 24 days—and emits 330 kg of CO₂.

Newer Proof of Stake (PoS) networks like Ethereum (post-Merge) and Cardano use 99.95% less energy by eliminating mining. Instead of competing with computational power, validators are selected based on their stake in the network. This reduces Ethereum's per-transaction energy use from ~200 kWh to just 0.03 kWh—comparable to a few Google searches.

The carbon intensity depends heavily on the electricity source. Mining in regions with coal-heavy grids (like certain parts of China or Kazakhstan) produces far more CO₂ than mining powered by renewable hydro or geothermal energy in Iceland or Norway.