Can Cryptocurrencies Be Environment-Friendly?

Cryptocurrency consumes a lot of energy. The process of mining for cryptocurrency tokens often results in a huge energy bill. In the case of Iceland, where the government heavily subsidizes geothermal energy, this is not particularly a problem. In other countries, such as China, the story is a bit different. Countries that rely heavily on fossil fuels to power their machinery are not very good for the environment when cryptocurrency mining is added on top of everything else. Even countries that are investing in green energy might be importing electricity from countries that do not. In other words, cryptocurrencies are not very environmentally friendly.

Bitcoin’s energy consumption rivals that of countries

Studies have shown that if Bitcoin was a country, it would be in the top 40 of the countries that consume the most energy. This places it in the same category as countries like Austria. The concerns over the massive energy consumption of cryptocurrency are amplified when further research shows that Bitcoin’s energy consumption is growing by roughly 20% every month. To put it into perspective, this means that if Bitcoin continues at this rate, then by the end of next year it will consume all the energy generated by all the world’s solar panels. Needless to say, that is quite a lot.

The greens are coming to the rescue

Fortunately, some environmentally minded developers are working on solving this issue. They have identified Bitcoin’s proof-of-work system as the main culprit when it comes to energy consumption. Now they want to launch a competing cryptocurrency to see if they can change the current pattern. Two good examples of these green cryptocurrency tokens are EnergyCoin and SolarCoin. Coins like these are designed to help with the building of new solar panel farms. In addition to fuelling the renewable energy industry, the new green coins will also require a lot less computational power (and thus energy) to verify transactions. Another coin that uses the famous Bitcoin name is Bitcoin Green.

Bitcoin bros don’t like the new coins

Although the emergence of the new green coins should come as a pleasant surprise, not everyone is equally happy with them. According to them, Bitcoin is already environmentally friendly. The major cryptocurrency mining centers are already using carbon-free electricity to power their machines. On top of that, they claim that the huge energy consumption of Bitcoin mining is driving the development of new renewable energy sources. This, of course, does not take into account all the households who are using fossil fuel energy to power their mining rigs.

Bitcoin Green might still have an advantage

Although the ‘Bitcoin bros’ are not too happy about it, there might still be some merit to green tokens like Bitcoin Green. Rather than banking on their system consuming so much energy that it forces renewable energy sources to be developed, Bitcoin Green focuses on not spending so much energy in the first place. Rather than proof-of-work, which is what slows down Bitcoin and consumes so much energy, Bitcoin Green will use something called proof-of-stake. This new system will encourage miners to make the entire system more efficient by incentivizing them to do so. Time will tell if Bitcoin Green catches on — let us know what you think in the comments below!

 

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