Know-how Cryptocurrencies can go green
Cryptocurrencies have come a long way, gaining popularity and in terms of their adoption since 2003. These digital assets have gone through a long process of remodifying on their way to becoming a globally recognized asset class. But pros and cons exist too. Cryptocurrencies have also attracted a lot of criticism, from illegal activities to the recent impact of crypto on the environment through crypto mining.
Many of the critics say, that digital currencies have no advantage when compared to traditional currencies and blockchain technologies in the number of carbon emissions and climate change. But the strong proponents of cryptocurrencies have been refusing to accept such criticisms. They back their arguments with its advantages and statistical data that shows the increasing popularity of digital assets all over the world. However, the critics have a strong point to be considered regarding the impact of cryptocurrency on the environment by cryptocurrency mining.
Reports and Researches
Though the statistics on cryptocurrency mining are very few they play a great role as they can heavily contribute to the environmental impact of cryptocurrency. The mining of Bitcoin and Ethereum occupy as much as 95% of all digital mining as it can cost a large amount of energy consumption, this is done with the use of the Proof-of-Work consensus algorithm as the dominant form of cryptocurrency mining. Even with the information on the massive blockchain network, Ethereum is planning to make a shift to the Proof-of-Stake consensus algorithm in the form of Ethereum 2.0, which can reduce the energy composition by 99%, but the launch date is still difficult to track.
As per the reports of Chain analysis, the Bitcoin network consumes a ghastly 121.4-Terawatt hours of power a year. Another research by Square stated that renewable energy sources like solar and wind are being used in the mining process of cryptocurrencies. This was possible with the fall of solar and wind prices by 90% and 71% over the last decade.
A research paper on research on the economic and environmental impact of bitcoin stated that China is the home for 60% to 70% of all Bitcoin mining farms close to power generating facilities. The miners rely on renewable energy sources to make mining profitable. And according to the study of Harvard University, the continued use of fossil fuels for cryptocurrency mining will gradually increase the carbon emissions to 5,269 MMmt.
All the above reports do not support the claims of critics of cryptocurrency mining damaging the planet to a great extent, but the negative aspects should also be acknowledged. As per the research by Harvard University estimates that each $1 of cryptocurrency created would be responsible for $0.66 in health and climate damages very soon.
The statistics may seem flat to the average user who is ignorant of energy consumption, but they are not that terrifying once compared with a vast number of other energy-consuming initiatives. Modern society survives on energy to meet its daily requirements. Hence, they strive for exploiting renewable sources like nuclear power. The production of any renewable sources, be it wind turbines and solar panels that are made of by-products of fossil fuel extraction and use, is also harmful to the environment.
Though cryptocurrencies and blockchain technologies are entangled, decentralized networks are vital to keeping the advancement going. This development is only possible with full-fledged centralization. Critics are raising concerns over environmental issues constantly, this is the case the airline industry can also be their next target, which is emitting 2.5% of the carbon emissions globally. But airlines are a vital part of international communications and so they can’t be directly targeted.
About the environmental impact of cryptocurrency concerns, there is a decline in the popularity of Bitcoin and other blockchain networks among environmentally-conscious users. Some of the Non-fungible tokens have been accused of being environmentally unfriendly. And so, some of the digital artists have pledged to give away their portion of earnings to invest in green energies.
For more profits, it is the basic economic sense for miners to shift to green energy sources. As they are cheaper to handle the growing production. And also, the shift from PoW algorithm to PoS can gradually lead to a considerable drop in energy consumption by the cryptocurrency mining farms. In this way, blockchain technologies can take a proactive stand in scaling into a completely new sector. These shifts can calm the voices of the critics by benefiting the environment too.
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