As the usage of cryptocurrency grows and more individuals and countries open their minds to it, so does its impact on the environment.
The world as we know it is currently debating how to effectively address climate change, and while we agree that fossil fuels, agriculture, and industrial pollution are the primary culprits, cryptocurrencies should not be overlooked.
Cryptocurrency mining has a big problem in that it consumes a lot of energy. While mining is only one way of validating cryptocurrency transactions and minting new coins, Bitcoin and Ethereum, the two most popular cryptocurrencies, use it.
The quantity of electricity used for Bitcoin mining alone cannot be directly calculated, however it can be inferred based on the network’s hash rate and the usage of commercially available mining rigs.
According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin, the most popular cryptocurrency network, consumes roughly 136.38 Terawatt-hours of energy each year, which is more than industrialized countries such as the Netherlands, Argentina, and the United Arab Emirates.
In second place after bitcoin is Ethereum. Ethereum is estimated to consume 112.6 Terawatt-hours of power generation per year, more than the Philippines or Belgium.
The typical Ethereum transaction used 268.6 kilowatt-hours of energy, which is equivalent to the amount of electricity consumed by an ordinary American household in 9.08 days.
The environmental impact of cryptocurrency
To comprehend the environmental consequences of cryptocurrencies, one must first comprehend how new coins are generated.
The blockchain depends on users to confirm transactions and update the blockchain with fresh blocks of details because cryptocurrencies are not regulated by a central body.
These blockchains must be extremely hard and expensive to validate in order to protect against malicious attackers seeking to misuse this new information.
As a result, proof of work (PoW) has been incorporated into the majority of cryptocurrencies.
Proof of work (PoW) is a consensus technique that enables users to validate cryptocurrency transactions by completing a difficult mathematical challenge.
The transaction is validated and a predetermined amount of cryptocurrency is rewarded to the first individual who cracks the riddle.
The cycle then repeats itself. It’s the most generally used method of reaching a consensus.
As a result, when someone mines cryptocurrency, they’re basically running applications on their computer to solve the challenge.
The more processing power your computer has, the better your chances of earning the opportunity to update the blockchain and reap the benefits.
As a result, miners are motivated to put more power behind their mining operations in order to outperform their competitors.
As cryptocurrency prices and user acceptance rise, the quantity of energy needed by cryptocurrency mining is anticipated to rise as well.
Mining cryptocurrency is a rigorous process: as the worth of the block reward rises, so do the benefits to begin mining. Higher bitcoin values indicate that crypto networks consume more electricity.
Electricity may appear to be a clean energy source, but several countries produce it by burning fossil fuels, which enhances the carbon emission in the atmosphere and exacerbates climate change.
The approximate carbon footprint produced by the electronic plants that provide that power is the major cause of environmental worries.
Cryptocurrency mining also produces a substantial amount of electrical trash due to the rapid obsolescence of mining hardware which includes computers, graphic cards, and so on.
This is particularly true for Application-Specific Integrated Circuit (ASIC) miners, which are customized equipment built to mine the most prominent cryptocurrencies. For starters, the Bitcoin network produces almost 37 thousand tons of electronic garbage each year.
While cryptocurrency holds a ton of potential, miners must find a way to mine in a sustainable manner in order to lessen mining’s carbon imprint.
Some efforts to make crypto more environmentally friendly could include repurposing methane gas from fossil fuel drilling that would otherwise be burned, as well as establishing plants in regions where wind power is strong.
The carbon impact of cryptocurrencies is more difficult to calculate. Despite the fact that fossil fuels are the most common source of energy in most nations where cryptocurrency is mined, miners must seek out the cheapest sources of energy in order to remain profitable. In many circumstances, this necessitates the use of new alternative energy sources.
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