Bitcoin prices are rising these days and so will be its mining. As cryptocurrency will become mainstream, its carbon footprint cannot be ignored.
What are Cryptocurrencies?
Global crypto market
- In 2019, the global cryptocurrency market was approximately $793 million.
- It’s now expected to reach nearly $5.2 billion by 2026, according to a report by the market research organization Facts and Factors.
- In just one year—between July 2020 and June 2021—the global adoption of cryptocurrency surged by more than 880 percent.
Carbon footprints of Bitcoins
- Increasing popularity of cryptocurrency has environmentalists on edge, as the digital “mining” of it creates a massive carbon footprint due to the staggering amount of energy it requires.
- A/c to the Bitcoin Energy Consumption Index, the carbon footprint of Bitcoin is equivalent to that of New Zealand.
- Both emit nearly 37 megatons of carbon dioxide into the atmosphere every year.
What is Mining?
- Mining is a process in which computational puzzles are solved in order to verify transactions between users, which are then added to the blockchain.
- In simpler terms, the works are created, or “minted,” through a process called proof-of-work (PoW), which establishes its unique identity.
How do cryptocurrencies create such a footprint?
- Unlike mainstream traditional currencies, bitcoin is virtual and not made from paper or plastic, or even metal.
- Bitcoin is virtual but power-hungry as it is created using high-powered computers around the globe.
- Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles.
- This is an energy-intensive process that often relies on fossil fuels, particularly coal, the dirtiest of them all.
Conclusion
- What this means is that, unlike traditional currency or gold, Bitcoin is not solely a settlement layer, not solely a store of value, and not solely a medium of exchange.
- This makes Bitcoin’s relative energy consumption productive in comparison to comparative sectors, given its robust potential uses.
- The promise of such an endeavor offers hope for a more sustainable cryptocurrency future.
- Whether this will make much difference to the climate crisis in light of government and industrial inaction remains to be seen.
Back2Basics: Bitcoin Energy Consumption Index
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