Saturday, January 28, 2023

The cryptocurrency transaction validation procedure structure and design make it consumes a lot of energy with considerable environmental impacts.

  • Mining is one way of validating cryptocurrency transactions and creating new crypto coins.
  • Determining cryptocurrency’s carbon impact is complicated.
  • Because Bitcoin is the most popular cryptocurrency, with its high energy costs, mining is almost certainly here to stay.

Many people are optimistic about cryptocurrencies like Bitcoin. However, sceptics point out a fundamental flaw: cryptocurrency mining consumes a lot of energy. Mining is one way of validating cryptocurrency transactions and creating new crypto coins. It is the mechanism employed by Ethereum and Bitcoin, the two most popular cryptocurrencies.

Read: How Blockchain Technology Could Help Energy Transitions in Africa

Crypto energy consumption

There is currently no direct method to measure how much energy cryptocurrency and Bitcoin mining consumes. However, the network’s hash rate and the usage of commercially accessible mining rigs help to infer the amount of energy used.

According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin, the most commonly mined cryptocurrency network, consumed approximately 85 Terawatt-hours (TWh) of electricity (0.38% of worldwide electricity use) and around 218 TWh of energy (0.13% of global energy production) at the point of production—more than  Finland and Belgium, according to the most recent country energy estimates from 2019.

Based on energy use until July 9, 2022, another estimate from Digiconomist, a cryptocurrency analytics site, puts the total at 130.3 Terawatt-hours. This use equals around 1455.8 kilowatt-hours of power per transaction, the same amount of energy spent by the typical American home over 49.9 days.

Based on energy use until July 9, 2022, Ethereum, the second-largest cryptocurrency network, is predicted to utilize 62.77 Terawatt-hours of electricity per year—equivalent to Switzerland’s power consumption. The average Ethereum transaction used 163 kilowatt-hours of electricity, the same energy a typical US home uses in 5.51 days.

Ethereum engineers developed a solution by introducing the proof-of-stake consensus method, although it is still under testing.

If prices and user acceptance remain volatile, the quantity of energy needed by cryptocurrency mining will most certainly fluctuate over time. Mining for cryptocurrency is a competitive process: as the value of the block reward rises, so do the incentives to begin mining. Higher cryptocurrency values imply that crypto networks require more energy.

Energy requirements in cryptocurrency mining

The high energy consumption of crypto mining is a benefit, not a flaw. Bitcoin mining is the automated method of confirming Bitcoin transactions in the absence of trusted third parties such as banks.

The cryptocurrency transaction validation procedure structure and design make it consumes a lot of energy with considerable environmental impacts. The network relies on the processing capacity of thousands of mining devices. This reliance ensures the security of crypto blockchains based on proof-of-work consensus.

Read: Kenya: KenGen readies to offer geothermal energy to bitcoin

Environmental effects of cryptocurrency mining

Determining cryptocurrency’s carbon impact is more complicated. Fossil fuels remain the most common energy source in most nations where cryptocurrency mining takes place. However, miners must seek the most cost-effective energy sources to stay profitable. This quest sometimes entails depending on new alternative energy facilities.

According to Digiconomist, the Bitcoin network emits around 73 million tons of carbon dioxide annually, equivalent to Turkmenistan’s emissions.

According to statistics, until July 9, 2022, mining for Ethereum emits a projected 35.4 million tonnes of carbon dioxide, the same amount as New Zealand.

Countries with the most significant crypto environmental impact

According to University of Cambridge researchers, most Bitcoin mining occurs in the United States, China, and Kazakhstan. According to the Center for Strategic and International Studies, coal and crude oil account for around 76% of China’s energy consumption.

China accounts for 21% of the worldwide hash rate. The United States accounts for around 38% of all mining activity. According to EIA statistics from 2019, the United States generates most of its power by burning fossil fuels. Kazakhstan accounts for 13% of global Bitcoin mining and mainly uses fossil fuels. Consequently, three nations largely reliant on fossil fuels account for around 72% of global Bitcoin mining.

Electronic waste

Cryptocurrency mining also creates a lot of electronic waste since mining equipment wears out rapidly. This case is- particularly true for ASIC miners, specialized equipment built to mine the most popular cryptocurrencies. Every year, the Bitcoin network creates around 36 thousand tons of electronic garbage, according to Digiconomist.

The possibility of cryptocurrency mining consuming less energy

Large-scale crypto miners are primarily situated in areas where electricity is sufficient, dependable, and inexpensive. However, crypto transactions and coin minting do not have to be energy-intensive.

The proof-of-stake (PoS) technique of authenticating crypto transactions and minting new coins is a low-computing-power alternative to cryptocurrency mining. Instead, the ability to verify transactions and run the crypto network depends on the amount of cryptocurrency a validator has “staked” or pledged not to trade or sell.

Other validation techniques are also being explored, such as proof of history, proof of elapsed time, proof of burn, and proof of capacity. While Ethereum designers have declared their intention to phase down the proof-of-work method, the Bitcoin community has no such plans. Because Bitcoin is the most popular cryptocurrency, with its high energy costs, mining is almost certainly here to stay.

Read: Africa: Kenyan 2022 election hints at the possibilities of blockchain in voting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Newsletter

Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

Leave a Comment

Web3 Africa

Community

We believe that the most important thing in the Blockchain revolution is the ability of people to understand and embrace the change. Our journalism standards – impartiality, truthfulness, transparency, and accuracy – will help you navigate this extremely dynamic world.

@2022  All Right Reserved.

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?