Hello everybody!
The world of digital assets stems from the act of crypto mining wherein ‘miners’ solve complex mathematical problems to add blocks of transactional information to the blockchain. They are rewarded with bitcoin and other cryptocurrencies as an incentive for maintaining the network. However, to do all this, miners consume significant amounts of energy that lead to environmental concerns.
As more people take interest in the world of cryptocurrency and how it works, the demand for crypto mining increases as well.
What type of impact does this have on the environment in terms of energy consumption? Let’s find out.
How does crypto mining work?
To understand the effect of cryptocurrency on the environment, you should first know how crypto mining works. Here’s a step by step guide on how the mining process works:
Step 1 - Verifying transactions using nodes
There are two ways to mine cryptocurrency: using your own hardware or software or through a cloud mining service. Miners first verify the transactions using nodes to make sure they are legitimate, then they move on to the next step.
Step 2- Creating a new block of data
The next step is when blocks are added to the blockchain. When the transactions have been verified, these are added into a block of data where they can no longer be altered or changed.
Step 3 - Additional information and hashes are added
Hashing or using mathematical processes takes place next. When the new blocks of data have been added, hashes and other information are included. To generate the hashes that will serve as each block’s ‘fingerprint’, miners verify or solve mathematical problems to complete the process.
Step 4 - Verification
Once the new hash is verified by all members of the network through a consensus, the block is then successfully added to the blockchain. The miner who was able to solve the problem first will then receive a set amount of cryptocurrency as a reward.
Why does crypto mining require so much energy?
The process of mining demands large energy consumption, reaching up to 120 Terawatt hours every year, which is equivalent to around 1% of the world’s energy consumption.
Experts have compared this level of energy consumption to the likes of small countries like Greece, Argentina and Chile who use fewer amounts of power annually. But why exactly does crypto mining require so much energy?
Cryptocurrency blockchains are public and decentralised so the upkeep of the entire network is left in the hands of its community that consists of computers all over the world. Part of this community are miners who play a huge role in ensuring that the network is secured and immutable. To do this, they use high-powered mining equipment that consumes a lot of energy.
The environmental impact of cryptocurrencies
With the mainstream adoption of cryptocurrency, it’s important to understand the impact of crypto mining on the environment. One of the biggest effects it has on nature is carbon emissions. Due to crypto or bitcoin mining, the amount of carbon emissions on the planet has increased by 40 million tons just over the course of two years.
E-waste is also another result of crypto mining. As crypto becomes more in-demand, miners will have to upgrade their hardware to make the mining process more effective. Over time, the outdated machines are turned into e-waste that is considered useless and non-recyclable.
Overall, e-waste and carbon emissions both affect climate change. This means that they contribute to the breaking of the ozone layer that results in global warming and other environmental concerns.
The future between cryptocurrencies and the environment
The next step to take for most cryptocurrencies is to go with more sustainable options. If miners use renewable energy instead of fossil fuels, this could turn the situation around for the better.
The carbon footprint of crypto mining would decrease dramatically if it weren’t for the ‘proof of work’ process since it requires all miners in the network to solve cryptographic problems, which means expending a ton of energy.
In fact, there are now cryptocurrencies that don't require mining at all. Some of the more sustainable options like Cardano, Ethereum and Bitgreen use ‘proof of stake’ to validate their transactions. In the proof of stake process, only validators that have ‘staked’ their coins or have already processed transactions can verify transactions and be incentivised.
There are other steps being taken to mine cryptocurrency quickly and use less energy while doing so. For example, the government in El Salvador has recently adopted Bitcoin as their legal currency on June 9, 2021. These are mined using the energy from nearby active volcanoes to promote a more sustainable process.
When other digital assets follow in these footsteps, it will lead the world of crypto to a more eco-friendly future wherein cryptocurrencies and mother nature can co-exist peacefully.
Thanks for reading and you are welcome to share your thoughts.
Cheers,
Karl from Bitcasino