2022-7-21 00:10 |
The debate on the impact of crypto mining has been on for as long as cryptocurrencies came into existence. Bitcoin, the pioneer cryptocurrency, uses a proof-of-work consensus mechanism to validate its blockchain. This mining process creates a new Bitcoin, which is then paid as a reward to crypto miners. The process of mining Bitcoin is said to be energy intensive as miners require massive computational power to secure the network.
Ethereum, the biggest altcoin by market cap, also uses a proof-of-work consensus mechanism. However, the Ethereum Merge upgrade scheduled for September 2022 will see the Ethereum Network transition to a proof-of-stake consensus mechanism. The proof-of-stake consensus mechanism is considered more environmentally friendly than the proof-of-work.
A recent investigation by a group of US Congressional Democrats into the carbon footprint created by mining companies has revealed that the mining companies are large energy consumers and are creating substantial amounts of carbon emissions. Some of the mining companies have been reported to have plans to expand their operations.
A ban by China on crypto mining in 2021 saw the migration of crypto miners to other jurisdictions, including the US. 2022 has seen the US facing a sizzling hot summer season that has already strained its energy consumption as consumers crank up their air conditioners to cool their homes and offices. This is amidst high energy prices caused by the war in Ukraine. The US congressional members have written to the US Environmental Protection Agency and the US Department of Energy requesting them to scrutinize crypto mining companies’ energy usage and carbon emissions.
As the debate on the impact of crypto mining on the environment rages on, several new and enhanced crypto consensus mechanisms have emerged to overcome the crypto energy consumption challenge. Some of the alternate or proposed crypto consensus mechanisms include the Delegated Proof of Stake (DPoS), Proof of Elapsed Time (PoET), Proof of Luck (PoL), and Proof of Activity (PoAc). However, each consensus mechanism has its pros and cons. Some crypto proponents have argued that crypto mining is not as energy intensive as crypto critics claim.
As an assessment is conducted on the impact of crypto mining on the environment, some states like New York have already put in place a moratorium on new fossil fuel plants for crypto mining. The debate on the impact of crypto mining on the environment goes on. Crypto regulation will provide a framework for crypto in general, including crypto mining and its energy usage. The US has pledged to reduce net greenhouse gas emissions by 50-52% in 2030, and its long-term strategy is to reach net-zero no later than 2050.
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