When the concept of digital money was introduced, it was believed that this new form of currency would translate to a much lesser carbon footprint. And it technically does.
Cryptocurrencies don’t need to be printed or molded like fiat currencies; they’re 0s and 1s that simply exist in a digital device or a network, etc. All the raw material that goes into making fiat currencies, crypto, of course, doesn’t need it.
The production of banknotes and coins causes harmful chemicals and gases to be released into the environment as a side product, and it is believed that these gases deteriorate the quality of the air we breath.
So, crypto seemed like a great idea to reduce this significant carbon footprint that’s going into making our currencies.
But, it did pose a problem.
Crypto draws in a ton of power, at an average of 127 terawatt-hours (TWh) annually, to be exact, and this figure is for Bitcoin alone.
This absolutely insane amount of power isn’t just drawn from mining Bitcoin, but every time a Bitcoin transaction occurs, it draws almost 707 kilowatt-hours (kWh) of electricity. These are some massive figures, and, of course, that electricity has to come in from somewhere.
This, in its own way, translates to a significant carbon footprint.
This deserves attention as issues like the global energy crisis and climate change are magnified each year into the future. The vast amount of energy that is being drained by crypto puts the sustainability of this future financial system of ours in question.
Luckily, significant efforts are being made that will allow crypto to reduce its carbon footprint by a significant margin. Let’s take a look at where crypto draws the most amount of power and why it needs so much power.
Why Does Crypto Need Power?
Most cryptocurrencies rely on something called a proof-of-work algorithm. This algorithm is used to essentially validate the transitions that occur on the blockchain. This is why Bitcoin transactions draw such a sheer amount of energy.
It was calculated that the energy that is essentially required for a Bitcoin transaction to be completed could potentially power an average household in the United States for about 27 days! So, this proof-of-work algorithm is actually much more harmful than people know.
This is part of the reason why most countries banned crypto mining, to curb the energy crisis.
But there are various measures that are being taken and planned for the future that aims to quench crypto’s energy thirst while protecting the environment at the same time! Let’s dive into that.
Proof-Of-Stake
As we discussed earlier, the main reason why crypto draws so much energy is because of the fact that most cryptocurrencies use the inefficient proof-of-work algorithm to validate transactions.
Not only is this algorithm extremely power-hungry, but it also takes a lot of time to complete a single transaction. In hopes of making crypto much more efficient, a proof-of-stake consensus algorithm has become more common in cryptocurrencies.
This new algorithm is far less energy intensive than the proof-of-work algorithm, and it is believed to be The consensus algorithm of future cryptocurrencies. Ethereum was among the mainstream cryptocurrencies to adapt this new energy-efficient consensus mechanism.
Upon testing, it was revealed that this new algorithm uses 99.9% less energy than the proof-of-work algorithm! Now that is mind-blowing! This is exactly why almost all major cryptocurrencies are moving away from the extremely inefficient proof-of-work algorithm, except for Bitcoin.
Bitcoin is literally the first cryptocurrency to use proof-of-work, and it is predicted that Bitcoin is highly unlikely to make a shift to proof-of-stake. But as we said, significant progress is being made to reduce the carbon footprint of crypto, and this energy-efficient consensus algorithm is proof of that!
Renewable Energy
The clean green crypto mission doesn’t end there! Apart from using a much more energy-efficient consensus mechanism, crypto miners can rely on renewable energy resources to power up their rigs.
This might also be one of the few ways to reduce the carbon footprint of Bitcoin since it still works on the proof-of-work algorithm. Using energy sources like solar is an excellent way to curb the environmental effects due to the vast amounts of power needed to mine Bitcoin.
Conclusion
There’s no denying the fact that crypto draws some pretty hefty power figures, but it is evident that continuous efforts are being made that are effectively decarbonizing crypto.
Crypto’s power issue can be targeted specifically to Bitcoin, it is the most mined cryptocurrency in the world, and it might continue to be so. Other cryptocurrencies have made significant efforts to become much more energy efficient, and it has worked wonders!
To curb Bitcoin’s carbon footprint, renewable energy sources might be among the limited answers, that is until Bitcoin finally moves to a proof-of-stake consensus mechanism. Addressing the environmental concerns of crypto is incredibly important, as it’s quite literally the future of our financial system.
So, it is here to stay. Of course, mining isn’t the only way you can get your hands on crypto; you can use a trusted crypto-buying platform, like Voltcoins, to purchase crypto hassle-free! Voltcoins is a premium and highly reputable platform that provides a secure crypto-buying service to its users.
You can pick your favorite crypto to buy, including Bitcoin (BTC), Ethereum (ETH), LiteCoin (LTC), and Tether (USD)! Voltcoins offers a fast KYC process and seamless transactions to make your crypto-buying experience a pleasant one.
You can also use three different payment methods to pay for your crypto, including credit card payments, bank wire transfers, and even Interac. If you’re looking for a trusted platform to buy crypto from, VoltCoins is definitely worth a shot!