What’s the Environmental impact of cryptocurrency?

What’s the Environmental impact of cryptocurrency?

The bullish run of digital currencies like BTC is expected to continue this year. But few fiat currencies and gold bugs address a vast flaw: cryptocurrency mining, the exhaustive energy progression. There is no other method other than cryptocurrency mining to avail freshly minted digital currencies or tokens using computers.

The proof of stakes both allows you to mint new tokens with the help of mining. Click here and understand cryptocurrency trading. Everyone thinks of cryptocurrency mining as a solid business with hefty returns, but only a few know about the environmental harm of these digital currencies. So let’s check out the environmental impacts of cryptocurrency and the alternatives of this process. 

Key Takeaways!

The only consensus mechanism responsible for processing such an energy exhaustive mining process is proof of work. No other consensus mechanism like proof of stakes and history hosts such an energy-consuming mining process.

The majority of cryptocurrency mining operations take place in the United States and China, but the hash rate contribution from China is dwindling after the mining ban.  

Despite the massive utilization of renewable energy sources in cryptocurrency mining operations, the environmental impacts are still huge. 

The mining alone produces e-waste of 35 kilotons, to be précised bitcoin mining. 

Developers are coming with a new flanged consensus mechanism, but it is tough to comply with the proof of stakes and history in the bitcoin network. In proof of stakes, the miners will have to stake a particular number of cryptocurrencies to become eligible for mining. 

For example, if Ethereum complies with proof of stakes, an individual will have to stake 32 ethers to qualify for mining that coin. Undoubtedly, proof of stakes will reduce the hardware cost of mining. Still, it is very challenging to buy such a large amount of cryptocurrencies having a solid value in the marketplace. In short, proof of stake implication on the bitcoin network seems impossible. 

Energy consumption and cryptocurrency mining!

The virtual coin that consumes a massive amount of electricity for executing mining operations is BTC. The difficulty rate of bitcoin mining is massive and has drastically increased in just five years. One year after the bitcoin release, the difficulty rate was 1 unit, but even after the mining ban in China, the difficulty rate was 23 trillion hashes in June 2021. The annual electricity chunk that bitcoin mining guzzles is 122.87 Terawatt per hour. Ethereum is more accessible to mine than bitcoin; still, it consumes less energy than bitcoin. 

Why does cryptocurrency mining consumes higher energy?

Some people think that energy-intensive cryptocurrency mining is a system error, but it is one of the attributes of mining characterized by proof of work. Digital currency mining is similar to the mining of gold as it requires hefty machinery and high energy to execute the operations with the help of these machines. 

The necessity of both ultra-costly machines and a plethora of energy sources to full fill the electricity supply creates a high threshold entry for the novices. But when it comes to mining ethereum, it is a bit easy to start. Cryptocurrency bugs state that no government interference attribute of this financial system offers some benefits over traditional one.   

Environmental aspects of cryptocurrency mining!

Mining operations generate more than 200 million tons of greenhouse gas, equal to most South American developing countries. Bitcoin alone generates nearly 100 tons, whereas Ethereum generates half of it. 

Besides generating massive greenhouse gas emissions, cryptocurrency mining also leads to a considerable amount of electronic waste. Even after the arrival and usage of highly efficient mining hardware, the impacts of cryptocurrency mining are huge. The annual waste produced by merely a bitcoin network is 30 thousand tons. 

Can cryptocurrency mining use less energy?

As discussed above, proof of stakes is the only solution to higher energy consumption. Proof of stakes is better than proof of work in many ways, but it will become hardly applicable to the leading digital currency, BTC. As per reports, cryptocurrencies on the proof of stakes mechanism do not require high-end mining hardware. Few cryptocurrencies that use this consensus mechanism are Cardano and Solana. 

These are the impacts of cryptocurrency mining on the environment.