Mining cryptocurrency for charity may feel like straying into dangerous ground, especially when you are encouraging your supporters to engage. It’s not uncommon for anything that challenges the status quo to attract a certain amount of ire or mistrust.Banks don’t like them because they bypass their systems entirely. Governments aren’t sure what to classify them as or how to handle businesses that trade with them. Some governments have banned them entirely.
But with stories of criminality and its unregulated nature – not to mention the energy required for mining crypto – can it ever be ethical?
Cryptocurrency is safe and extremely resistant to fraud.
If you were to Google Silkroad – a dark corner of the internet known for criminal activity – a reference to cryptocurrency or Bitcoin would undoubtedly be in the results.
That’s because – for a time – those that wanted to carry out criminal activity relied on Bitcoin because it operates outside of the usual financial systems.
It was perceived to be untraceable.
Of course, thanks to blockchain, Bitcoin and certain other cryptocurrencies aren’t untraceable because the blockchain records everything. Every transaction throughout its entire existence is there for public scrutiny.
Crypto certainly sits outside of the usual anti-fraud and anti-money laundering procedures that banks carry out but then again so do cash payments. The difference is crypto relies on peer verification before transactions are completed whereas cash moves from person to person in a widening chain of anonymity.
Cash is almost impossible to trace and within fiat currencies it is vulnerable to counterfeiting. In 2016 the UK alone removed 347,000 fraudulent bank notes out of circulation with a face value of £7.5 million.
Crypto is impossible to fake.
Private cryptocurrency coins are both transparent and anonymous.
Despite the transparency of a lot of the older currencies, the vast majority of the new coins – and the ones that charities and their supporters can expect to mine or trade in – are private coins.
These coins – as their name suggests – don’t have the same level of transparency as the older coins in an effort to increase security and, to an extent, anonymity.
Some perceive this as a way of turning crypto into something closer to cash, further deregulating an already unregulated market, but this is somewhat misleading.
Private coins still undergo a verification process just like the standard crypto but, depending on the encryption being deployed, different parts of the transaction get obfuscated to protect the privacy of those involved.
This can be done in a variety of ways, such as lumping transactions of the same type of crypto together so an individual purchase can’t be picked out.
Some will naturally be suspicious of the need for privacy when the idea behind crypto was that every user would be subject to one another and transparency would be maintained through the public blockchain.
It’s a valid point. The natural conclusion is that private coin will encourage criminal behaviour – and it may well – but there isn’t a currency in history that hasn’t.
At least cryptocurrencies, private coins or not, require transactions to be verified before they are completed.
There is a slim chance that private coins you receive in donations could have been used for criminal activity at some point in their existence but there’s a far greater chance that the cash donations you receive have too.
A story by CNN in 2009 and another 2017 put the number of dollar bills in circulation with traces of cocaine on them between 80-90%.
This doesn’t mean that US charities that accept cash donations are morally bankrupt. Especially as the cash – or the crypto – ultimately gets translated and added to an electronic bank balance.
Essentially, you can’t damn a currency because of the actions of an unsavoury minority - especially when it's capable of doing so much good for charitable organisations.
Cudo Donate mines cryptocurrency in a sustainable and environmentally-friendly way.
Mining for cryptocurrency uses energy. There is no way around that, but then again doing most things consumes energy someway, somehow.
The main objection for some seems to be the fact that crypto mining consumes energy for no tangible result. This is entirely true.
A computer’s CPU draws energy to check complex sequences of numbers until it gets a match and wins the coin. It will keep trying as long as it draws power and it has been instructed to carry out that function. Energy is consumed in the process.
However, there is a bigger picture. The amount of power the CPU is pulling verses its normal daily activity is marginal. There is also a calculation that allows you to work out – based on your computer’s specification verses your rate of mining success – what your return on investment is.
Ultimately, mining only uses marginally more power than you or your organisation would consume anyway. Mining leverages that consumption to give your organisation a new revenue stream.
Of course there are ways to offset this consumption.
We work out the energy consumption for all the computers using our Cudo Donate mining app – be they an individual or a business – using the calculation we mentioned, taking into account the energy mix by country to give us the total carbon footprint for the crypto mined. We then purchase carbon credits in order to make your mining efforts carbon neutral.
Plus our own crypto mining efforts are powered by 100% sustainable energy. We decided right from the start that if we were going to mine cryptocurrency on any kind of scale it couldn’t be at the cost of the environment.
This is why we scoured the globe to find a location that could not only provide clean energy to power the facility, but clean cooling too. So anything we mine is done so in a sustainable way.