Cryptocurrencies have matured by an enormous amount despite their incomprehensible backgrounds. Even though mainstream investors and economists defined digital currencies as a tool for funding criminalized activities, the market has made tremendous growth over the past decade. As a result, the cryptocurrency industry has emerged as revolutionizing space in this world.
We all know, top two cryptocurrencies are bitcoin and ether. BTC and ETH have soared up by tons of folds in the last five years. Market value, market adoption, and institutional acceptance of these two digital currencies are just now immense. To know the exact dynamics of cryptocurrency trading, check https://bitcoinsmarter.org/. Undeniably the advantages are significant, but people are still concerned regarding the impact of these digital currencies on our ecosystem.
Many environmentalists have raised their voices about cryptocurrency production and guzzling energy. However, the impact of cryptocurrencies on our environment is currently not visible. Still, in case it is continuous, even with the same speed, we will see significant adverse impacts on our climate in the future. So, let’s check out the impacts of cryptocurrencies on our climate.
Why does cryptocurrency mining need an enormous amount of energy?
The skyrocketing energy consumption of cryptocurrency mining is majorly due to POW. POW creates a competitive environment amongst the miners. Everyone knows cryptocurrency has come into the limelight due to the political independence feature. The cryptocurrency network prefers to keep the history of records and transactions public.
Entities that records the transaction history on this blockchain are miners. The network encourages these miners to record the transactions in return for cryptocurrency rewards. For example, if a cryptocurrency miner verifies bitcoin transactions, the miner will receive the reward in BTCs. Likewise, if a miner verifies the transaction of the ethereum network, he will avail rewards in the form of ether. Professional miners own special mining machines, and these miners engage the mining machines into a race of decoding a math puzzle early from fellow competitors.
The miner who successfully solves a cryptographic equation faster than fellow miners will add the block to the blockchain. Cryptocurrency bugs and enthusiasts state that proof of work technology is much better than centralized financial technologies. Undeniably with the help of proof of work, the cryptocurrency network does not need to rely on any third party, but solving cryptographic math puzzles is very energy guzzling.
Bitcoin mining consumes 121 TWH!
Bitcoin, the utmost familiar name in the cryptocurrency market, consumes almost 121
Terawatt per hour of power each year.
Bitcoin network guzzles electricity higher than many developing countries. Including Bitcoin, ethereum also utilize POW instead of POS, and its energy consumption is much higher than the electricity utilization of entire Qatar.
Environmentalists are concerned about increasing electricity usage by cryptocurrency mining. As cryptocurrencies are getting famous, forming these computer-based tokens is also rising. The rising difficulty of cryptocurrency mining leads to a slump in mining profitability as electricity consumption increases due to more incredible difficulty.
Burning of Fossil Fuels!
Before the cryptocurrency crackdown in bitcoin’s hotspot, china, most mining pools and plants used electricity to run the mining machines. Most electricity in China is produced by burning fossil fuels like coal. Coal is a prominent foundation for generating electricity for many reasons and is limited. However, burning coal decreases its quantity in nature and releases greenhouse gas n in nature by an exceeding amount. Bitcoin mining alone generates 35 million tons of carbon footprint.
What is the solution to cryptocurrency mining massive energy consumption?
As discussed above, proof of work accounts for a competitive environment amongst miners. Moreover, if a node cannot crack the cryptographic puzzle in a given time, the network restarts the entire process for that miner. On the other hand, technologies like POS and POW can pave the way to the energy-efficient cryptocurrency industry.
Proof of stakes prohibits everyone from participating in mining actions. Proof of stakes works on the lottery system, as it will randomly select a group of miners from the entire miners across the globe. The selected group of miners will add blocks to the blockchain. Therefore, you cannot mine virtual coins in proof of stakes according to your will.
These some are facts stating how cryptocurrency mining affect the environment.