Crypto mining is the mechanism through which cryptocurrencies function. A computational puzzle must be solved to store the transactions on a blockchain.
This procedure necessitates a substantial amount of processing power, which uses a lot of electricity and other energy sources like coal and gas. In addition to the actual mining process, cryptography’s upkeep and security require more energy.
According to research, the yearly energy consumption of bitcoin miners alone ranges from 60 to 125 TWh, or 0.6% of the world’s electricity, and is comparable to that of several nations like Austria (75 GWh) and Norway (125 GWh).
We may roughly assume that the bitcoin sector consumes a significant amount of energy once all the other multiple coins are taken into account.
Cryptocurrencies range in terms of the number of users and the complexity of the “puzzle” that must be solved, with some requiring more computational power than others.
Energy usage will rise along with puzzle difficulty. Because of the need for ever-increasing computer power, upkeep of problem-solving procedures, and security as user numbers rise, cryptocurrency is not sustainable over the long run.
The Crypto Climate Accord, which was established by more than 200 businesses and individuals last year, intends to decarbonize the global cryptocurrency industry and help it achieve net-zero greenhouse gas emissions by the year 2040, primarily by utilizing renewable energy sources.
Since the cryptocurrency sector is still developing, additional energy-saving technologies, algorithms, and breakthroughs are anticipated in the future.
For instance, when a new version of Ethereum (known as Ethereum 2.0) is available for usage, it will consume 99.95% less energy. The changeover won’t happen for a few more years, though.
Up to 70% of bitcoin miners rely on hydropower, solar power, and other sustainable sources of energy for their electricity.
Traditional banks use energy to operate their virtual and physical transactions, just as cryptocurrencies do.
The central server and digital security are two examples of virtual transactions. While ATMs and branches are involved in physical transactions, you need also to consider the needs of each location, such as air conditioning, staff, computers, etc.
Traditional banks also make use of tangible money like coins and bills. In addition to energy, several materials are needed, including metals, ink, cotton, etc.
The entire yearly energy consumption of traditional banks is estimated to be 87 TWh from an estimated of 600,000+ branches worldwide, 26 TWh from servers that are running, and 26 TWh from ATMs.
It is not surprising that traditional banks use a lot of energy, given that we may suppose they are used by 70% of the adult population worldwide.
Although cryptocurrencies use a lot of energy, the entire monetary system has already been incorporated without any additional energy use in real life from physical branches, buildings, bills, or even human resources.
It can only handle some transactions at once, though. Even using the entire amount of electrical energy needed to run a typical household for weeks, one transaction alone demands a lot of computational power, especially NFTs.
However, traditional banks can execute thousands of transactions at once despite consuming a significant amount of energy for both their physical and virtual components.
The world now considers both digital currency and conventional money to be essential. It facilitates practically every human function and eases many elements of life.
It is obvious that the currency market will use up a lot of energy. As a result, it’s still difficult to say whether the approach is more sustainable.
However, the immense opportunities provided by both monetary systems should also be considered when evaluating sustainability.
The best course of action is to keep innovating and refining these technologies so that they are more sustainable while still offering their advantages. Fortunately, environmentally friendly cryptocurrencies are becoming more popular.
Given the magnitude of the global cryptocurrency market, it is difficult and slow to embrace these more environmentally friendly cryptocurrencies, but demand for them is still high.
Not all of us can contribute to the advancement of technology. Nevertheless, we may alter our way of living to one that is sustainable to balance energy consumption by using the 6Rs method: rethink, refuse, reduce, reuse, repair, and recycle!
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