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In order to do that, a blockchain is an exciting option in which individual actors can share information and chain their inputs with other actors without an intermediary. This ecosystem is undergoing rapid growth and has immense potential as it continues to evolve.
The below-mentioned portion discusses some of the energy consumption concerns with bitcoin and blockchain, as well as how users in the future may resolve them; the electricity consumption of this cryptocurrency is 127 TWh annually. It is roughly equivalent to 1% of global power consumption. It is not yet clear how much of the annual energy consumption is related to the mining process; however, it can be assumed by people that this amount will grow when more people join the network in a process similar to how internet traffic grows and improves due to increased participation.
When it comes to environmental impact, Bitcoin and blockchain present several challenges:
The first issue in which blockchain may harm the environment is energy consumption during mining operations. This problem has been well documented for some time but has only recently been recognized by industry leaders. Some of the issues include high energy requirements, inefficient protocol design, wasted energy in transaction verification, and the fact that most mining operations are located in areas with higher costs for renewable energy infrastructure.
A good example is that Bitcoin mining consumed over 3% of total global electricity consumption in 2017. An estimated 80% of Bitcoin mining occurs in China, where power rates are significantly lower than in other parts of the world. It could be a factor that contributes to environmental degradation because China is experiencing significant growth in its electricity demand and coal production.
From a technical standpoint, blockchain projects may require significant amounts of energy. For example, Ethereum uses a proof-of-work algorithm that requires miners to perform millions of calculations per second to verify transactions.
The biggest issue with this is that Ethereum is not renewable, and it will be challenging for the platform to maintain its sustainable and environmental footprint as demand increases. But, more importantly, this may also present issues about scalability.
Why does Cryptocurrency Mining Requires Energy?
Mining Bitcoin requires hardware and electrical power, which consume significant energy. A large number of miners are competing for a limited amount of BTCs (currently 6.25) released by the system regularly, every ten minutes. Miners are tasked to solve challenging problems before earning coins; therefore, as cryptocurrency mining progresses, the competition will only increase. The worst part is that there is no clear end in sight; that means that the problems will get more challenging and the rewards
more minor.
To be more profitable, miners have used more energy-efficient equipment and techniques, such as ASICs and FPGAs, instead of GPU-based systems. However, ASICs are not as energy-efficient as GPU systems and will likely consume relatively more energy due to the intense computations performed by individual miners.
It is a problem because once miners use up the available energy sources in their local area, they will have to either invest in renewable energies or move to a country where they can take advantage of lower rates. Unfortunately, there are not many countries that currently have low electricity costs. If this trend continues, it may become difficult for blockchain companies to find sustainable sites for mining operations. It could send mining out of the country and into areas with lower environmental impact.
Environmental Impacts of Cryptocurrency Mining:
The following are potential impacts that are mostly related to the process of mining and currency circulation:
Negative impacts on land use
It has been observed that although the electricity for cryptocurrency mining is produced in most countries, the mining operations are often located in areas with a lower environmental impact. Therefore, it has been proposed that cryptocurrency mining produces more energy than can be consumed by Bitcoin and other altcoin networks. In fact, this could end up being a positive impact on global energy consumption because some regions with relatively low renewable energy production could benefit from net exports.
Carbon Emission:
If the cryptocurrency mining industry continues to grow at this rate, it might significantly affect the number of carbon emissions as more electricity is required to operate mining equipment. In addition, it could lead to a situation in which millions of dollars are invested to produce cryptocurrencies with no value.
One must also consider that crypto mining does not have the same environmental impact as traditional mining; for example, infrastructure requirements for crypto mining are much smaller and more flexible. But unfortunately, the technology used to power cryptocurrency mining and the electricity required for operations are not as renewable as many think.
Industrialization
Cryptocurrency mining negatively impacts the environment because it is growing on an industrial scale and becoming increasingly more competitive than ever before. At this rate, there will be significant growth in the demand for computing resources, increasing the number of sites that use non-renewable sources of energy. It is estimated that by 2030, cryptocurrency mining could consume up to 20% of global electricity production if left unchecked. It would lead to increased greenhouse gas emissions and substantial environmental damage unless something is done about it now.