Bitcoin remains in headlines for numerous reasons. It has caught the attention of people, as well as, governments all over the world. Recently, this digital currency is making news not for its volatile prices or government regulations, but for a different reason. There is a growing concern over the amount of energy that goes into Bitcoin mining and its potential impact on the environment.
The high power consumption needed for Bitcoin mining has become the biggest snag for the crypto-mining industry. Bitcoin mining process involves extensive mathematical computations that nodes have to accomplish when verifying transactions in a blockchain. This means a huge electricity bill.
The issue of power efficiency:
First, it is important to consider the fact that Bitcoin has a built-in structure to reduce its energy use over time. Satoshi Nakamoto, Bitcoin’s anonymous inventor, developed the network in a way that the rewards for mining bitcoins will decrease in the future. This means it will become unprofitable for miners to invest in bigger and more energy-hungry equipment. At the time of its launch in 2009, every block produced yielded 50 Bitcoin as payment for the miner who produced it. That amount decreases by half every four years. In 2020, verifying one block of transactions to the blockchain will be worth only 6.25 Bitcoins.
Now, a question arises whether bitcoin is worth such enormous energy usage at all. When we have the credit card, cash, and mobile phone to make quick payments, what’s the need for Bitcoin. Moreover, as compared to conventional payment networks, Bitcoin has a slow processing rate. Bitcoin is advantageous in cases where you want to get away with banks and operate in secrecy beyond the view of governments and other regulatory agencies.
Moreover, every form of physical stores of value takes energy to produce it. Be it mining for gold or oil, all have considerable impacts on the environment. Bitcoin mining can’t be considered a ‘waste’ as it has the potential to decentralize most commercial activity and handle power back to individuals instead of expensive intermediaries.
What can be done?
According to a report, cryptocurrency “mining” is consuming more power than the whole of Ireland. Now, it comes to our mind that if bitcoin uses this much power, what can be done.
With increasing mining activity, a lot of coal is going to make electricity, thus, increasing the bitcoin’s overall carbon footprint. Considering the impact of Bitcoin mining on the environment, we should consider exploring some viable options. No complete solution has been invented yet, but there are a few ways to mitigate its negative impact.
The miners all over the world aren’t working under a single executive team. Although there are zero chances of doing this, if the Bitcoin mining community purchased clean energy, this would have reduced the impact on the environment.
Secondly, if more and more miners begin to switch to an eco-friendlier power source, like renewable hydroelectric power to mine Bitcoin, the burden will somewhat be reduced. There are Bitcoin miners who are committed to renewable sources of energy and their power comes from hydro-power generator.
However, miners will switch to renewable energy sources, if they find it profitable. To make this a lucrative option for miners, the crypto community could further incentivize miners with additional Bitcoin by rewarding them for using renewable sources. Though it is a difficult process, this could be programmed into the algorithm or offered as a bonus.
Also, some miners are considering burning trash to generate the electricity for mining to created waste-to-energy crypto mine. Another option would be to switch to a Proof of Stake (PoS) mining process. Moreover, Bitcoin miners should understand the need for energy efficient Bitcoin mining hardware and a comprehensive hosting plan to maintain their mining capacity over the duration of their investment.
Furthermore, the crypto enthusiasts need to come up with an initiative to develop a zero-carbon solution to the problem with the least disruption. A committee of environmental scientists and crypto experts should work together to find the most viable solution.
Originally posted 2018-09-26 07:15:32.