After their origins a little over a decade ago, cryptocurrencies have come a long way. From being considered tools of criminal conspiracy and being rejected as a scam, these financial tools have made unbelievable progress. They have now been accepted in the mainstream financial world as legitimate instruments of revolutionising the conventional ways of the economic arena.
Although many still hold doubts and apprehensions about the utility and trustworthiness of these digital currencies, their potential strengths undoubtedly outweigh the concerns. Especially since the development of applications like the british bitcoin Profit, investing in bitcoins has become easier and much more secure. Here are some reasons to consider trading bitcoin.
However, despite the many benefits that cryptocurrencies bring us, one concern that still remains is the environmental consequences of large scale bitcoin mining. Many environmentalists have raised their concerns regarding the impact of cryptocurrency mining time and again.
The amount of energy going into the generation of bitcoins, known as mining, has drawn the attention of many, as it indeed is a serious threat to environmental stability. To understand how cryptocurrency mining can harm the environment, we must first consider how cryptocurrencies are mined and why this process consumes energy.
Why does mining consume energy?
Cryptocurrency mining involves large scale consumption of energy because of the proof-of-work blockchains used to store data. Instead of storing information on a centralised database, cryptocurrencies utilise a network of miners to record all transactions. These distributed networks work on the basis of incentives and block rewards. Specialised computers are employed to record new blocks in the form of a computational race.
The creation of these blocks is made possible through solving cryptographic puzzles which employ complex energy-intensive computations. Although this system of blocks is very reliable and avoids all chances of a single point of failure, the energy consumed in the process remains a serious cause of concern.
How does cryptocurrency mining impact the environment?
The impact that the mining of cryptocurrencies has on the environment can be understood in the following ways:
1. According to the latest estimates, only bitcoin mining consumes energy equal to the whole country of Argentina in a year. Other cryptocurrencies like Ether are also large consumers of energy every year.
2. The mining of digital currencies becomes less efficient as the price of the currencies increases. This is because the mathematical puzzles required to create the blocks become more difficult as the prices go up, even if the transactions remain constant. This implies that as the network of bitcoin increases, more power and energy would be consumed to process the same number of transactions.
3. Since coal and fossil fuels are the chief sources of electricity worldwide, the large quantities of electricity consumed in the generation of cryptocurrencies would directly influence the amount of fossil fuels burned. This makes cryptocurrency mining a significant cause behind the fast consumption of fossil fuels and carbon dioxide emissions, directly linking them to climate change and global warming.
4. In addition to the consumption of energy, cryptocurrency mining would also generate a significant amount of electronic waste in the form of obsolete hardware and computer parts that cannot be put to any other use. This electronic waste would, in due course of time, contribute to land pollution.
Cryptocurrencies are undoubtedly one of the most efficient financial tools that have the potential of revolutionising the world of finance through the use of efficient technology. However, living in a world already facing the threats of climate change and environmental destruction, reducing energy consumption becomes a must. Advocates of cryptocurrency have been claiming that over 70% of cryptocurrency mining uses renewable sources of energy. Such claims have often been disputed since no strong proof could be produced.
In such cases, the use of renewable energy sources for the generation of cryptocurrencies would indeed be the best solution available at hand. In this regard, it is worth noting that there are a large number of cryptocurrencies that have a negligible environmental impact. Proof-of-stake blockchains like Cardano and EOS can serve as possible alternatives under such circumstances.