One of the biggest controversies around cryptocurrencies is their energy consumption. Many cryptocurrencies are created in the so-called process of energy-intensive mining. Over the years, new digital currencies have emerged that can be produced in an alternative way and thus consume less energy.
Bitcoin and other cryptocurrencies are becoming increasingly popular among traders and investors. While environmental impact is not always a priority for buyers, new developments in reducing energy demand may affect the price and efficiency of cryptocurrencies. Effective trading is one of the most important topics related to cryptocurrency these days, but this certainly does not mean that cryptocurrency trading on the Bitcoin Profit website is declining due to the emergence of new subcoins.
Bitcoin is considered the most energy consuming cryptocurrency. It is not only the most popular digital currency, but also has the largest market capitalization. It is estimated that Bitcoin consumes more energy each year than countries such as Argentina or the Netherlands (almost 123 terawatt hours). The second most popular cryptocurrency – Ethereum, in turn, uses almost 100 terawatt hours.
Experts do not doubt that the amount of energy used to extract cryptocurrencies will increase. All because in a digital currency like Bitcoin, the supply of cryptocurrencies is declining, meaning that the issuance of new units requires more and more computing power – which is increasingly difficult and energy consuming.
Bitcoin mining is proof of the work, which is one of the most important features of cryptocurrency. Evidence of the case requires a lot of energy, but it makes Bitcoin decentralized and has strong guarantees against illegal abductions by cybercriminals. Thanks to PoW, cryptocurrencies that use it do not have to use the services of intermediaries – all transactions are carried out by miners.
The NFT environment looks equally problematic, meaning virtual tokens that use blockchain technology to buy valuables and virtual property. NFT tokens work mainly on Ethereum, which consumes a lot of energy. Work is currently underway to create a new version of Ethereum 2.0 that consumes 99.9% less power than the current one.
Carbon dioxide emissions
Cryptocurrency production is associated with increased carbon dioxide emissions, which can be compared to CO2 emissions generated by small countries. This applies to both bitcoin and Ethereum. Most cryptocurrencies are produced in the United States and Kazakhstan. These countries obtain electricity through the burning of fossil fuels, which has a direct impact on the environmental impact of cryptocurrency mining.
Cryptocurrency mining is becoming increasingly difficult. Increasingly complex cryptographic puzzles require the use of more modern equipment, as older models cannot cope with the growing problems. The Bitcoin network is estimated to generate 30,000 tons of electrical waste each year.
Ecological mining of cryptocurrencies
Environmental cryptocurrencies are digital currencies that do not use much electricity or use environmentally friendly sources. Many new cryptocurrencies that emerged after Bitcoin use the proof-of-stake consensus method. This allows you not only to produce new coins, but also to check and confirm payment transactions. The prediction method is not considered energy efficient because it does not use that much computing power.
Work is underway on other energy-intensive methods that should not be based on high computing power.
More attention is being paid to smaller cryptocurrencies, which could be a remedy for Bitcoin’s high energy consumption. On the other hand, their less carbon footprint may be the result of fewer operations performed. Currently, the most environmentally friendly cryptocurrencies with the lowest energy demand are: IOTA, XRP and Chia.
All cryptocurrencies that use business-proof consensus methods to extract units are considered the most hostile to the environment. As a result, some cryptocurrencies can use as much electricity as all countries.
Most bitcoins are produced in the United States, which uses residual fuels to generate electricity. 39% of green energy sources are used to extract Bitcoin.
However, these are not all the problems that accompany cryptocurrency mining. Increasing the production of electrical waste is equally important. There are high hopes for new, environmentally friendly cryptocurrencies whose goal is to reduce the amount of electricity needed to produce them.