Thousands of people have chosen to invest in this popular form of cryptocurrency, making Bitcoin a household name. Although a single coin was only worth a dollar in 2011, its value has since soared to the point that most individuals can barely afford a fraction of one.
However, Bitcoin mining, the process through which it is created, is incredibly energy-intensive, consuming massive quantities of electricity on a daily basis. As a result, it has become something of an environmental issue.
So, why is Bitcoin so harmful to our environment, and can it be made more environmentally friendly?
The Mining Method
The appeal of crypto-mining is that miners can make a lot of money for each block they mine. Each Bitcoin block mined currently carries a coin reward of 6.25 BTC, which decreases by half every four years. As a result, many people are willing to invest a lot of time and effort into mining Bitcoin in the hopes of making a large profit.
Anyone with the appropriate specialized hardware can theoretically mine Bitcoin. In reality, thousands of people now mine Bitcoin full-time on their own. Mining Bitcoin, on the other hand, necessitates a significant financial commitment.
Since hardware required to mine Bitcoin can cost upwards of $10,000, mining is primarily done at large Bitcoin mines, as most people cannot afford such a large investment. These mining companies have the specialized machines needed to mine Bitcoin, but on a far greater scale than a single miner’s setup.
The Cost to the Environment
The total amount of energy required to run the Bitcoin network is greater than that required by some major countries, spending over 120 TWh per year. Despite the high value of each Bitcoin, many people are increasingly questioning if the financial gain is worth the environmental costs.
Bitcoin mining and its massive energy outputs are currently being protested by climate activists and the general public. Those that support Bitcoin or even own Bitcoin mining firms, on the other hand, are standing up for this sought cryptocurrency.
When the environmental repercussions of Bitcoin can be so severe, it can be difficult to understand the benefits of Bitcoin. Crypto companies, on the other hand, are now considering more environmentally friendly mining methods, such as locating mines in locations with greater availability to renewable energy sources.
Bitcoin and the Environment: Finding a Good Middle Ground
Mines might be concentrated around renewable energy resource centers in these countries, allowing mining to become significantly more reliant on environmentally favorable sources rather than fossil fuels. However, this is simply an idea, and there are a number of unanswered questions.
Several national governments are considering implementing environmental rules on Bitcoin mining operations in order to prevent the usage of excessive quantities of electricity. Furthermore, in some nations, the concept of imposing a tax on Bitcoin miners’ electricity usage has been advocated. Taxes on the companies who make the hardware needed to generate Bitcoin could also be enforced.
There have also been discussions about pausing mining operations for a period of time and selling the coins that have already been mined, but this would reduce the number of coins that cryptocurrency firms can generate.
Other cryptocurrencies, such as Cardano, are said to be more environmentally friendly, however many of these cryptocurrencies do not have nearly the same value as Bitcoin.
The Proof-of-Stake Approach
Proof of Stake involves the use of validators, or individuals who feed cryptocurrency into a system, thereby creating a stake for the validator.
Instead of mining for the next set of coins required for the next block in the blockchain, validators can ‘forge’ for them when a new crypto allocation enters the system. Because it consumes far less energy, cryptocurrency supporters are now promoting it as a solution to the environmental problem.
The main problem with this system is that it functions more like a lottery, in which the individual who has the most ‘tickets’ has a better chance of winning. In other words, the more you invest in the network, the more likely you are to receive a reward.
Bitcoin Has a Significant Carbon Footprint, But Also Has a Promising Future
There is currently no overarching answer for Bitcoin’s environmental repercussions, yet there are no signals that the currency will go extinct or become worthless anytime soon.
Due to Bitcoin’s growing popularity, it is critical for the industry’s prominent names to continue inventing more environmentally friendly mining technologies so that cryptocurrency may remain without endangering the environment.