![]() Ultimately, not only does digital money offer many great advantages, but it’s a step towards a greener future overall Many welcome both the Bitcoin Mining Council, unveiled by Musk in May to monitor and improve the industry’s sustainability, and the Crypto Climate Accord, which is a private sector collaboration focused on making all blockchains carbon neutral by 2030. However, she says things are changing rapidly, noting that ethereum will shortly be switching to a proof-of-stake protocol that is expected to reduce electricity consumption by 99%. Monica Long, general manager of RippleX, which provides open-source code and developer tools to accelerate interoperable blockchain technology, agrees that proof of work is “very energy intensive”. He estimates that cardano is “four million times” more energy efficient than bitcoin. Proof-of-stake uses considerably less energy than proof-of-work chains, because “network participants are chosen to validate ‘blocks’ of transactions based on how many coins they hold rather than the computational processing power they have”, Hoskinson explains. Other, greener consensus mechanisms are gaining in popularity, such as the ‘proof-of-stake’ blockchains that underpin cryptocurrencies like cardano, polkadot and algorand, and don’t require mining. As chief executive of global blockchain engineering firm IOHK, he’s also the driving force behind third-generation cryptocurrency cardano.Īccording to Hoskinson, bitcoin’s carbon footprint will “become exponentially worse because the more its price rises, the more competition there is for the currency” and thus the more energy it consumes. “It’s set to get worse because energy inefficiency is built into its DNA,” Hoskinson argues. Notably, the other three on the list of the five worst offenders – dogecoin, bitcoin cash and litecoin – all use the ‘proof-of-work’ protocol.īitcoin’s energy consumption has more than quadrupled since the beginning of its last peak in 2017, says Charles Hoskinson, co-founder of ethereum – the second largest crypto by market capitalisation. Bitcoin and ethereum between them consume more than three quarters of the electricity used by all cryptocurrencies. Solving the proof of work energy issueĬurrently, bitcoin would rank as the 32 nd-highest nation in the world by energy consumption, ahead of the Netherlands. It’s no coincidence that China’s government has cracked down on crypto: the vast majority of bitcoin is mined there, driving up energy demand and making it harder for the country to achieve its target of net-zero emissions by 2060. ![]() The latest bitcoin bull run, which began at the end of 2020, has sparked a surge in mining, bringing with it increased energy consumption. It’s a vicious correlation, because the higher bitcoin’s market value – in February it easily became the quickest asset in history to reach $1tn, after only 12 years – the more energy is consumed. This is due to its ‘proof-of-work’ protocol: a decentralised consensus mechanism that requires members of the network to expend effort solving an arbitrary mathematical puzzle so that no one can hijack the system. Bitcoin in particular is a victim of its own success, at least when it comes to environmental concerns. Unsurprisingly, some worry that these investors could sour on bitcoin and other energy-draining cryptocurrencies. Indeed, Musk’s damning assessment arrived at the same time that a Pew Research Center study found that 37% of Gen Z and 33% of millennials in the US cite climate change as their top personal concern. These consumers are also more eco-conscious than older generations. It’s a big problem for cryptocurrencies because the majority of investors (77%) are aged under 45, according to a study published earlier this year by Gemini Exchange. In May, however, when Tesla boss Elon Musk decried the environmental effects of the mining that goes into validating bitcoin transactions, the energy issue became a burning topic. Cryptocurrency has long had a dirty secret: the energy needed for bitcoin mining.Ĭrypto evangelists – who believe a decentralised financial system is for the greater good – tend to ignore this inconvenient truth.
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