Can Bitcoin be eco-friendly?
Satoshi Nakamoto created Bitcoin due to the financial crisis of 2008, which became one of the most traded cryptocurrencies. Many people see this virtual asset as the future of money that will solve the shortcomings of traditional currencies. Moreover, this digital currency is not only a store of value but also a medium of exchange.
However, along with trading, users of this digital currency can choose to engage in mining of this virtual currency. Bitcoin mining involves transaction verification, a process that creates new coins and requires a lot of electricity and expensive hardware.
There is no direct way to calculate what miners use when mining this virtual currency. However, this virtual currency is one of the most mined cryptocurrencies in the world.
According to the Cambridge Bitcoin Electricity Consumption Index, this virtual currency consumes 85 terawatt hours (TWh) of electricity. In addition, it consumes about 218 TWh of energy during production.
Why Is Bitcoin Mining Energy Efficient?
This virtual asset is the process of verifying the transaction without the use and intervention of intermediaries such as banks. Instead, this digital currency has an underlying technology known as blockchain that helps validate transactions. Therefore, the network depends on the computing power of many mining machines, so the mining process requires a lot of energy. Also, blockchain technology uses PoW consensus to confirm transactions. However, apart from mining, you can trade Bitcoin through an exchange like bitcoin.
Is Bitcoin environmentally friendly?
Many people consider Bitcoin to be environmentally unfriendly because it has high energy requirements and creates a lot of environmental waste. Therefore, this e-money does not reduce its energy footprint, because the process of verifying a Bitcoin transaction is very expensive. Even after bitcoins are mined and miners are rewarded, the network will still need a lot of energy to verify transactions. Therefore, this digital currency will never be environmentally friendly.
Does Bitcoin Increase Your Carbon Footprint?
Miners of this digital currency take no risks by searching for the cheapest and most renewable source of energy. For example, China has decided to shut down a large number of intensive Bitcoin mining farms. Therefore, miners from these places have moved to areas where renewable energy is abundant. And these virtual currency miners choose to find sites with renewable energy and cheap electricity.
Also, many of these digital currency miners moved from China to the US after China made it difficult to mine this digital currency. Here in the US, they focus on finding sites with renewable energy sources.
However, this digital currency is unique with the largest market capitalization compared to other cryptocurrencies. In addition to environmental issues, the PoW system ensures that the network is safe and secure.
Despite this, this virtual currency consumes almost half of the energy consumed by gold and the banking sector separately. In addition, this digital mining creates a lot of e-waste because the mining equipment is thrown away. Therefore, the mining of this digital currency generates approximately 38,000 tons of e-waste per year. Miners using application-specific ICs confirm that their mining rigs quickly become unusable.
In general, this digital currency is not an environmentally friendly cryptocurrency. However, this virtual currency offers the world many advantages such as inflation protection, fast and real-time transactions, cheaper transactions, and guaranteed permanent and transparent transactions.