28 Jun Crypto Mining & the Environment: The leading eco-friendly Cryptocurrencies.
Cryptocurrency mining impacts the environment because of the energy-intensive process it entails in order to mine coins. Let’s have a look into the consequences to mine coins and the solutions we don’t get to hear about.
The relationship between cryptocurrency mining and the environment
Cryptocurrencies are not regulated by a central authority. The blockchain relies on users to validate transactions and update the network with new blocks. To prevent attempts of manipulation, these blockchains are complex and expensive to verify. Hence, proof of work is built in most cryptocurrencies.
Proof of work is a mechanism that allows users to validate cryptocurrency transactions by solving complex mathematical puzzles. The first user to provide the solution validates the transaction and gets a fixed amount of cryptocurrency. Then cycles continue in order to generate cryptocurrency.
When the mining process is ongoing, there are programs running on the computer which require a power supply. The greater power behind the computer, the more chances of mining cryptocurrency. This is the primary reason miners are motivated to utilize more power.
ASIC miners are computers designed with the sole purpose of mining a particular cryptocurrency algorithm. All its efforts are generated towards mining. Over the years, ASIC machines have become a necessity for mining Bitcoin since the competition has widely increased.
The University of Cambridge estimates that Bitcoin alone generates 132.488 TWh annually. The amount of carbon dioxide emitted by mining depends on how the energy was created. Nearly 40 billion pounds of carbon dioxide is produced by US Bitcoin alone, the number would only increase if other cryptocurrencies are accounted for. Moreover, almost every 4 years the value of Bitcoin awarded after mining is cut in half. After each halving, carbon emissions required to create one coin are doubled.
Are cryptocurrencies bad for the environment?
Proof of work is a prominent way of validation and is likely to remain so in the present time. However, not all cryptocurrencies are produced through proof of work, as a result, not as much energy is consumed in those processes. Blockchain can attain validation through other methods.
Proof of Stake
Miners use the cryptocurrency they already own to verify new blocks on the networks. They lock their coins to create a validator node, which can verify a transaction. When a block of new information needs to be approved, the blockchain will choose a node at random. If the validator successfully verifies the block, it’ll be added to the network, if they attempt to add a block with inaccurate information, the user will lose the coins they put at stake.
This system doesn’t have an energy usage issue but has been criticized as those with the most coins are likely to get maximum rewards. However, there are more than 200 coins operating through proof of stake.
Proof of burn
This method is a combination of Proof of Work and Proof of Stake. With this mechanism, validators burn an amount of cryptocurrency which permanently removes them from circulation. This allows validators to purchase a virtual mining rig that mines the amount you burn. As a result, you are mining cryptocurrency without as much energy consumption.
This is a new method and was initiated to cater to environmental concerns surfacing because of Proof of Work. It’s not popular or commonly being used as of now. Only one cryptocurrency uses proof of burn.
Proof of capacity
Instead of calculating the computational power of stake, Proof of Capacity utilizes available storage on the mining equipment for validation. Possible solutions are stored depending on the space on the device. The more solutions, the more chances of having the correct one for the algorithm.
You can find some coins using this system in the market today.
Proof of Elapsed Time
This is a consensus mechanism, primarily used in private blockchains. These blockchains require access to view, contrary to public blockchains. The user who gets to update the blockchain is chosen randomly.
Future with crypto and environment
Despite advancements in other methods for generating cryptocurrency, the Proof of Work mechanism is on the rise. The question then becomes finding a sustainable way to supply electricity. This would mean moving mining operations towards countries with more environment-friendly energy production. We also see parts of the cryptocurrency industry moving away from Proof of Work to cater to the impact on the environment.
Moreover, the Cypro Climate Accords have acquired 250 signatures from individuals and companies in order to reduce carbon emissions. They have unanimously decided to bring down the carbon production to net-zero by the year 2030 and eventually aim to decarbonize the cryptocurrency industry by 2040.
We hope to see an evolution in the coming years through the innovations and choices of the miners.
There are cryptocurrencies that endorse themselves as sustainable coins. Some of which may be the main contenders for being more sustainable than Bitcoin. Let’s have a look at some of the cryptocurrencies available.
Bear in mind, that we don’t endorse any cryptocurrency mentioned in this article. You may make investments at your own risk.
- SolarCoin SLR
SolarCoin is decentralized and independent of government associations. You can mine and trade it like any other cryptocurrency with the main difference being that it will be powered by solar energy.
SolarCoin produces one coin for every Megawatt hour generated from solar technology. Presently, it primarily relies on users uploading documentation to prove energy generation. However, it aims to streamline this process in the future with automatic updates from solar arrays.
- Powerleger (POWR)
Since its debut, its price had been on the rise even when most cryptocurrencies saw a downfall in the market. POWR assists in securing various products of the Powerledger network including energy trading, clean energy tracking, and verification.
With renewable energy like wind and solar, there is uncertainty about the power produced. Powerledger offers an even, decentralized network that assists producers in tracking, tracing, and trading energy in real-time, making it consistent. In June 2021, POWR made a switch from Ethereum to Solana-based blockchain. It intended to take advantage of the Solana code base’s scalability.
- Cardano (ADA)
Cardona was established by the co-founder of Ethereum and was tested to be the first peer-reviewed blockchain. It is a digital currency but can be used for other purposes. In comparison to Bitcoin’s 7 transactions per second, Cardano can achieve 1000 per second.
Cardano uses the Proof of Stake mechanism where the users purchase tokens to join the network. This saves a great amount of energy by consuming just 6 GWh.
Nano is fast, free, and uses less energy than Bitcoin and many other cryptocurrencies. It was established in 2015 and has a small carbon footprint.
Nano used block-lattice technology, which is energy efficient. It relies on the Proof of Work mechanism but the block-lattice creates an account chain for each user on the network. The Nano platform uses a system called Open Representative Voting (ORV), in which account holders vote for their representatives. It is through the representative that the blocks of transactions are verified.
Rather than involving an entire linear block, users get updated asynchronously. To avoid delays and competition, Nano involves the sender and receiver account chains. It can handle up to 125 transactions.
- IOTA (MIOTA)
IOTA is not an unpredictable cryptocurrency in terms of its value. This is a good call for investors who look for stability in the market and not for those expecting the same payoffs as Bitcoin or other altcoins.
IOTA uses Fast Probabilistic Consensus and relies on Proof of Work, with the overall energy consumption remaining small. For every transaction, IOTA uses 0.11 Wh. This, even in comparison to financial companies like VISA and Mastercard, is quite low.
- EOSIO (EOS)
EOSIO is a public blockchain popular amongst developers for its simple and easy-to-set-up interface. It allows writing applications in various programming languages without a price.
EOSIO uses the Proof of Stake mechanism and already mined EOS tokens that can be traded at cryptocurrency exchanges.
- TRON (TRX)
TRON is a public blockchain that supports all programming languages. The platform allows users to share applications directly on the blockchain which helps the process become more efficient.
TRON uses a two-tier model of Super Representative and Super Representative Partners. Every account is able to become and vote for an SR.
Their currency, Tronix, is already mined and can be traded on cryptocurrency exchanges.
- Signum (SIGNA)
Burstcoin changed its name and became Signum (SIGNA). The original Burstcoin is non-existent after becoming delisted and facing a price decline, back in 2019.
SIGNA is one of the most environmentally friendly cryptocurrencies.
Miners are rewarded for utilizing storage space for mining. Since the energy used to mine is minimum, this makes SIGNA more efficient than ASIC or GPU mining using the Proof of Work algorithm. SIGNA uses the Proof of Capacity mechanism and recently updated it to Proof of Commitment.
Users also don’t require hi-tech gadgets to mine SIGNA, it can be easily done with a smartphone.
- Chia (XCH)
Chia can be mined on the Amazon Web Services computing platform. You can get started within a few minutes as Chia farming is not complex, unlike other cryptocurrencies.
Chia was established by the founder of BitTorrent. When it was launched, China faced a shortage of hard drives as miners wanted more storage space for mining Chia.
The Chia Network is a smart transaction platform that allows users to utilize the available space on the hard drive. Chia uses the Proof of Space mechanism, which rewards you XCH after a particular amount of data is stored over time.
Chia farming is specially designed to be simple and can be done without any equipment. Its blockchain transaction platform is known as Mainnet and can be found on its website.
In a nutshell
As we have brought to you some green cryptocurrencies, there are still many sustainable options available in the market. With time, the crypto market is aiming to become friendlier towards the environment. The future looks upon the expansion of the cryptocurrency industry, better start making smart and sustainable choices now that they’re available.