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- The Crypto mining sector has been a concern for many due to its environmental impacts
- The cryptocurrency industry is already working to shift to other consensus mechanisms to reduce power consumption
- A 100% shift to renewable energy usage can remove the industry from the list of threats to climate
Crypto mining has been a significant concern of many globally due to its usage of electricity. In recent developments, Elon Musk, the CEO of Tesla and SpaceX, has also shown concerns regarding the power usage behind Bitcoin mining. And leading the environmental concerns, Musk withdrew the acceptance of BTC in exchange for Tesla’s products. However, before Musk, other higher profiles like Bill Gates have also shown such concerns. Notably, the first individual to raise concerns about reducing CO2 emissions from mining cryptos based on the Proof-of-Work consensus.
Why is crypto mining a threat to climate?
Over the past few years, when the cryptocurrency price began to surge, the cryptocurrency miners have been racing to solve complex math problems using hash power. Following the scenario, the miners started to purchase more mining rigs to increase their hash power. Ultimately, the competition among miners increased the usage of considerable amounts of electrical power.
According to Cambridge’s Centre for Alternative Finance research, it was estimated that the crypto mining operations annualized 145 TWh worth of electricity every year. And if we observe the stats comparing with the global electricity consumption, it is around 0.65% of the total consumption. And the factor brings mining operations among the top 30 electricity consumers.
Steps being taken by the crypto industry to use less energy
The Proof-of-Work (PoW) consensus mechanism is the reason behind the mining operations requiring more power. Following the situation, Ethereum, the second most popular crypto asset globally, had shifted from PoW to Proof-of-Stake (PoS) mechanism. Hence the shift eliminated the need for mining and reduced the requirement of energy by 99%.
On the other side, several blockchains are also observed being built upon the Layer-2 solution. The solution ultimately reduces the usage with the required transaction fees by batching volumes of Layer-2 transactions. And the batches occasionally get settled on Layer to verify the validity of such transactions. The developers of Bitcoin are also working on adding a Layer-2 solution.
Many other concepts are also being tested that are seeking to reduce energy consumption. Moreover, Energy Web, Rocky Mountain Institute, and the Alliance for Innovative Regulation have partnered to ensure that the crypto industry shifts towards 100% renewables within this decade.
Can renewable energy be able to benefit?
Renewable energy is like hydroelectricity that is being generated using natural sources. Such type of energy is considered green and good for the environment. Several miners are trying to boost the shift of their operations towards renewable energy. Hence, if miners use renewable energy, the growth in the use of power for crypto mining will not doom the environment. And if the entire sector adopts natural energy, then the operation will no longer be a roadblock.
