Most bitcoin traders are betting upon the bullish run of digital currencies, but critics and environmentalists keep criticizing the energy-consuming nature of these digital currencies. You can visit bitcoinsystem to get features like excellent customer support, live trading and lesser trading fees while bitcoin trading. The minting process of digital currencies is not merely used by non-mainstream cryptocurrencies but also the hottest digital currencies of this decade: bitcoin and Ethereum.
Cryptocurrencies and blockchain adoption are at their peak, and people are still considering starting digital currency mining despite the profitability issues. If the adoption of cryptocurrencies keeps increasing at this pace, the greenhouse gas released from these minting digital currencies will skyrocket.
Key takeaways:
Digital currencies that use the famous consensus mechanism named proof of work, such as BTC, mandate a gigantic extent of energy for the minting process. Minting does not mean developing new tokens, as the network uses a similar process to authenticate a transaction’s legitimacy and decrease double spending issues. Double spending is why cryptocurrency mining was developed in the first place. Since no third parties can detect money counterfeiting or double-spending in an explicit cryptocurrency network, the mining process takes care of it all at once.
The prominent place to start cryptocurrency mining is where the price of power is lower; for example, in China, the cost of electricity is way less compared to the United States. However, the percentage of gigantic cryptocurrency miners is still high in the United States compared to china because china recently decided to shut down every procedure subjected to privately mined currencies.
As per surveys and reports by Investopedia, almost 38 kilotons of e-waste is generated by cryptocurrency mining activity every year. The figure merely represents the amount of e-waste generated by bitcoin mining.
Some digital currencies are operating fine without the mining process, but these cryptocurrencies are only partially decentralized, and one such example is ripple.
Cryptocurrency Energy Consumption
Undeniably experts have yet to find a more straightforward way to detect the amount of energy guzzled by cryptocurrency mining annually. Still, according to the annual e-waste generated by this activity, the electricity consumed is near 250 TWh. Ethereum is another famous model that empowers decentralized applications on its platform with the assistance of smart contracts. The electricity consumption of this currency is correspondingly very high, which is 80 TWh.
Why Cryptocurrency Mining Requires Energy
Many people think that the cryptocurrency community will fix the energy-intensive issue of the mining process. However, you must know that it is not a bug but is one of the inert features of digital currencies that operate on the proof of work consensus mechanism. Since bitcoin mining is utterly automated and does not require human intervention, it requires a lot of electricity to power the computer or mining hardware so that they can perform mathematical calculations by themselves.
Thousands of mining machines are competing for a single block reward. As more miner becomes a member of the community to get the reward, the ease of getting a block reward diminishes, creating a competitive environment that further leads to massive electricity consumption. Undeniably, the competitive environment in the cryptocurrency mining ecosystem is responsible for the foolproof security of these currencies, but it is damaging our environment to an exceeding extent. The combined electricity consumption of all the cryptocurrencies is way more than many nations, such as Argentina.
Environmental Impacts of Cryptocurrency Mining
People cannot easily calculate the carbon gas emission of digital currency. Therefore, conventional energy sources are undeniably predominant in almost every nation where people are minting digital currencies, and miners must look for an energy source that does not cost as high as electricity.
The carbon dioxide produced by bitcoin mining alone is equal to 73 million tons, per a few reports, whereas when it comes to ethereum, it is just half of bitcoin.
Electronic Waste
Minting digital currencies correspondingly produces massive e-waste as mining hardware instantly becomes obsolete. It explicitly fits the ASIC hardware, which is mainly built for merely the mining process.
Could cryptocurrency mining use less energy?
Undeniably gigantic cryptocurrency miners are merely situated in the regions where the extent of energy is significant. However, the progression of minting digital currencies and even authenticating transactions is not necessitated to consume a considerable amount of electricity. As discussed above, the proof of work model consumes energy when it comes to bitcoin mining. Another potential alternative to proof of work which is lesser energy-intensive is proof of stakes. Both of these consensus mechanisms are used by some of the famous digital currencies. Still, proof of stakes is more environmentally friendly as it does not create a competitive environment in mining.