It is assumed that bitcoin consumes a considerable amount of electricity when mined. In mining, superpower computers are used, creating a hunger for electricity and supports the statement. The use of ASIC and some other mining-related advanced software uses enormous electricity. The Bitcoin mining process consumes around 127 terawatt-hours of electricity. This electricity consumption is equal to the annual electricity consumption of Norway city. Thus, bitcoin mining creates an environmental burden, but on the other hand, it also benefits the economy and the countries using it for payments. If you are newbie in the trading world, you may consider knowing about the role of Cryptography in Bitcoin
As time passes, the bitcoin mining process and solving complex mathematical algorithms are becoming harder and harder. As a result, the mining of bitcoin is halved every four years. So, with passing time, mining does not involve the same number of bitcoin as the number of bitcoin that has been mined before. One more reason that contributes to more energy consumption of bitcoin while mining is that several mining groups are working on the same block for mining bitcoin. 99% of miners did not win the race due to mining the same block.
How to decrease bitcoin energy consumption: –
Renewable energy resources: –
Renewable resources like solar, wind, and electricity are produced through water turbines. However, around a few years back, it withdrew its interest in investing in the mining process, and now China has banned the use of cryptocurrency. As soon as China withdrew its interest in bitcoin mining, the mining fell from 42% to 25% in August 2021.
Countless startups are addressing carbon footprints and finding new ways to use more environmentally friendly energy resources for bitcoin mining.
Transition to the proof-of-stake system: –
Proof of work requires multiple setups to solve complex puzzles and many other resources. Instead, one can use proof of stake to mine bitcoin. It saves energy and only allows the machine to work on a problem simultaneously, whereas proof of work runs all the programs together, leading to higher energy consumption. Moreover, in proof of work, an array of machines are running to solve the same computational problem, which is a waste of energy.
Ethereum has shifted from proof of work to proof of stake in its new version, ethereum 2.0. It will help to reduce the energy consumption of ethereum based tokens.
Embrace pre-mining: –
To avoid wasteful mining processes and computing, some cryptocurrencies have introduced pre-mining. It is the same as the government issuing fiat currency. A central financial authority carefully creates a set amount of an item. They are then released into the economy depending on the world’s requirements and what is happening at that time in the economy and businesses. Several other cryptocurrencies are not mined. Thus they are produced depending on the demand and supply; thus, they eliminate the need for high-speed mining software and hardware.
In this system, the transaction is also verified by a decentralized authority. But before adding to the blockchain network, it needs to pay a small number of fees to compensate validators for efforts as the currency is not mined and the currency itself does not reward them.
Transferring bitcoin from proof of work to proof of stake can save a considerable amount of electricity, and the electricity saved can be used for other purposes. However, to make changes or alter the bitcoin mining system to prove stake, someone has to convince the miner’s majority to accept the new system.
Introduction of carbon credits or fees: –
A carbon credit represents that only a specific amount of carbon should be released into the environment by the companies that mine bitcoin. Mining companies need to purchase carbon credits from companies that are not emitting more carbon into the environment. Bitcoin mining companies produce more carbon than other companies. Therefore, they must purchase carbon credits from other companies to offset emissions.
Conclusion: –
Steps must be taken to reduce the carbon footprint of bitcoin mining, and we have to focus on the more efficient resources for bitcoin mining. Shifting to renewable sources of energy and some changes in the use of hardware and software can also help to decrease carbon emissions by mining companies. It is suitable for our environment.
