A widely discussed topic around cryptocurrencies is the huge electricity consumption. As we know, this is a major problem around the world, and it is not a surprise that it causes some bad advertising around digital assets.
One thing is clear, the impact cryptocurrencies have on the environment will not be ignored, as they become an important part of the financial world.
At the very beginning of its creation, Bitcoin was announced as an independent of the central stakeholders' solution. Its blockchain consensus is based on a race between the miners and the network, and this is the reason for the high energy consumption.
Although we talk a lot about Bitcoin when it comes to energy consumption, we must say that every cryptocurrency has its impact on the environment. Of course, it always depends on the amount of mined assets, as well as on the type of energy consumed.
According to specialists, the computing power, required for cryptocurrency mining, doubles every year and a half, which makes the problem even bigger.
Is there a possibility for cryptocurrencies to become greener?
Cryptocurrency experts say that mining is an outdated process. They are already trying to make cryptocurrencies more sustainable. Actually, we can see that in the last few years, there are no new cryptocurrencies using proof of work protocol as it is an old technology.
So, the conclusion we can make is that crypto creators are trying to make them more sustainable and greener, so they can have a more positive impact on every aspect of our lives. How is this possible?
Sources of energy
One of the first things that comes to mind, when we talk about going green, is using alternative sources of energy, such as hydro, wind and solar power. This is one of the ways to make bitcoin mining more sustainable.
Actually, there are already hydroelectric plants created for mining Bitcoin in the US and Costa Rica, and other companies are planning to create a solar-powered technology for mining bitcoins.
Proof-of-Stake
As we already mentioned, according to specialists, proof of work is an outdated technology that is no longer used by newer digital assets. Bitcoin and Ethereum, for example, are based on proof of work, which is a problem-solving and energy intensive technology.
On the other hand, newer cryptocurrencies use a different protocol, called proof of stake. These systems are not using computational race, but proving the ownership of enough coins. Proof-of-Stake system validators are being selected by an algorithm, taking into account their stake, which can actually save energy.
A popular example for such cryptocurrency is Cardano. It was developed by the co-founder of Ethereum. To become members of the network, investors don’t have to mine new coins. They are just buying units of Cardano.
Regulations on digital currencies
There are two main regulations that can have an impact on cryptocurrencies.
First of them is the requirement for cryptocurrencies to be more transparent about the costs of carbon.
The second can come in the form of carbon tax.
These types of requirements come from environmental organizations. The European Parliament has also proposed regulation of the cryptocurrency market, including some green practices.
We can also see some countries banning bitcoin mining, although there might be other reasons for that, and not only environmental issues - China, Egypt and Iraq are only part of them.
The need for environmental consciousness
Younger generations are becoming more conscious about keeping the environment. That is why, crypto investors also become more interested in greener crypto alternatives that do not require mining and are trying to achieve positive environmental behavior.
The trend is followed by many regular users and crypto investors, as well as by influential people. Elon Musk for example stopped bitcoin payments at Tesla, which is said to be because of the high energy consumption of the cryptocurrency.
Conclusion
We believe that there is a high possibility for cryptocurrencies to go green, although it comes with huge changes. Of course, cryptocurrencies are seen as a part of the future and a technological innovation. As we can see in other industries, they are trying to become green as this is imperative, and the crypto industry is believed to be on the same point.
On the other hand, the world is facing new challenges that may change the direction of crypto development.
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