Crypto Sojourn to Green

Crypto Sojourn to Green

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Cryptocurrencies like Bitcoin and Ethereum have come a long way since their launch a decade ago. They have earned the status of a volatile digital asset from being internet currencies. In the early years, Bitcoin mining only required a laptop, but it is no longer a viable option now that the amount of energy needed to generate Bitcoin has increased exponentially.


at presentAnd the Bitcoin, the world’s largest cryptocurrency, consumes an estimated 133.64 TWh of electricity annually – more than Argentina, which has a population of 45 million. On the other hand, its largest competitor, Ethereum, consumes about 78.01 TWh of electricity annually, which is comparable to Chile, according to the Bitcoin and Ethereum Energy Consumption Index of Digiconomist.

This great thirst for electricity comes from the Proof of Work (PoW) consensus mechanism, the latter being a type of mining, in which powerful computers race with each other to process transactions, solving complex mathematical problems that require five numerical guesses per second. As a reward for this authentication service, miners receive new coins, providing a financial incentive to keep computers running.

Growing concern about the harmful impact of cryptocurrency mining on the environment has led many countries to not only ban mining but also ban these cryptocurrencies altogether. These include countries such as Algeria, Bangladesh, Egypt, Iraq, Morocco, Oman, Qatar, Tunisia and China. The latest country to ban cryptocurrency mining is Russia, but it is not only countries that have noticed the harmful impact that cryptocurrency has on the environment, but also companies. In May 2021, electric car maker Tesla suspended the purchase of cars with Bitcoin due to climate change concerns, CEO Elon Musk said in a tweet. Musk has always been a supporter of cryptocurrency. after his tweet, Bitcoin is down more than 10%.

However, the good news is that the industry has woken up early and started taking a number of initiatives in this regard. “The cryptocurrency industry is new and within 10 years of Bitcoin’s existence, people are starting to work towards making crypto more sustainable and environmentally friendly. If we compare it to other industries that have been in business for a very long time, it still is to come up with completely green alternatives. Take for example the automobile industry. Internal combustion (IC) engines responsible for high carbon emissions have been around since the 19th century but even today, the automobile industry does not yet offer an environmentally friendly alternative that is scalable and accessible to the masses,” Sumit Ghosh, CEO of Chingari App.

In 2021, Crypto Climate Accord was launched, a private initiative to decarbonize the cryptocurrency sector by facilitating the compensation procurement process for blockchain projects. So far, more than 200 companies, chains, and individuals associated with the crypto, DeFi, energy, and technology sectors have signed up as its supporters. Here are some other initiatives.

Proof of Stake system

While the power system that underpins Bitcoin is known as “Proof of Work,” some in the industry are pushing to build new digital currencies on a different system called “Proof of Stake.” The second largest cryptocurrency, Ethereum, is moving from a Proof of Work (PoW) model to a Proof of Stake (PoS) system, leading to the creation of Ethereum 2.0.

Also Read: Will Ethereum Merger With Victorius?

Under the “Proof of Stake” mechanism, anyone who owns any amount of cryptocurrency can put up their tokens as collateral for the development of the blockchain. In return, the user is rewarded with a fixed percentage of the pledged assets as rewards when a new block is added to the blockchain. This process is called “storage” of crypto assets. Power consumption for Proof of Stake is minimal compared to Proof of Work. Less than 0.01 percent of the energy consumed in the mining process is used. Proof of Stake algorithms can also be run from a laptop while Proof of Work requires specialized computing equipment.

Then there are mixed consensus models like Solana that integrates Proof of History and Proof of Stake, allowing the network to process up to 50,000 transactions per second (tps), while it takes several minutes to validate a single Bitcoin transaction. Furthermore, Solana has an average transaction cost of $0.00025, which means that it has huge scaling potential.

Other crypto projects such as Solarcoin and Power Ledger have already started using energy-efficient consensus algorithms such as proof of date (Solana), proof of elapsed time, proof of burn, and proof of capacity.

Mining by renewable energy

It is well known that there is an unlimited supply of Bitcoin that can be mined the way the digital currency is structured. And as miners rapidly approach this upper limit, the power requirements for mining each token will only increase. Therefore, a number of companies have started to take steps towards renewable energy sources such as hydropower, wind and solar energy. These include names such as London-based Argo, Canadian company Hive Blockchain, and US-based companies such as Bit Digital and BlockFusion. Then there’s the Houston-based technology company Lancium, which has raised $150 million to build bitcoin mines across Texas that will run on renewable energy.

Jack Dorsey, co-founder and former CEO of Twitter, has noted this growing problem posed by cryptocurrency mining. On June 5 last year, Dorsey announced a new $5 million investment in bitcoin mining using renewable energy sources for his US financial services company. The same week, El Salvador President Neb Bukele instructed state-owned geothermal companies to mine bitcoin using 100% clean, renewable, and emission-free energy from geothermal sources. Recently, Uzbekistan has legalized cryptocurrency mining by solar energy for its business owner. Moreover, it has exempted all crypto operations by domestic and foreign companies from income tax.

So, what percentage of mining comes from clean energy? According to the Bitcoin Mining Council, the Voluntary Global Forum of Bitcoin Miners, created by Michael Saylor, CEO of software company MicroStrategy, puts the figure at 59.5%. However, the completion of a new research paper on the electricity mix and carbon footprint of the Bitcoin network (titled Rethinking Bitcoin’s Carbon Footprint)published in Elsevier Journal Joule on February 25, 2022, finds that the share of renewables powering the grid is decreasing to 25.1% in August 2021 from 41.6% in 2020.

While renewable energy sources such as wind and solar energy help reduce the cost of mining, they are not without limitations as they are an intermittent source of energy. Bitcoin miners have fixed power requirements. In the case of wind power, electricity production fluctuates with the weather. Excess supply can cause grid congestion and even lead to power outages. Other renewable sources such as solar also pose problems in their inability to generate consistent and sufficient power to run for a full day without interruptions by shutdowns. Once the Bitcoin ASIC miner is turned on, it will not shut down until it crashes or you are no longer able to mine Bitcoin at a profit. For this reason, bitcoin miners are increasing the base load demand on the network.

New encryption chip

In April of this year, Intel, one of the world’s largest chip makers, announced a new Blockscale ASIC (Application Specific Integrated Circuit) chipset, to improve the efficiency of cryptocurrency mining by demonstrating its mechanism of action. Get the same amount of bitcoin for less energy. However, contrary to industry standards, Intel will only provide its customers with the chip instead of a completed ASIC mining system. Moreover, the company claims that it will be able to provide the volume of these chips without compromising the supply of new CPUs or GPUs. Companies such as Argo Blockchain, Hive, and Block Inc have signed up to purchase the chip.

The United States New Mining Center

After China banned cryptocurrency in September 2021, the Bitcoin mining map has changed dramatically. The United States quickly became the world leader in bitcoin mining and the number one hash rate. This was due to a number of reasons such as the presence of renewable energy sources, low energy prices and pro-cryptocurrency policies. Texas ticks all the boxes and has a lot to offer miners. The state boasts some of the cheapest energy sources on the planet — a huge incentive for miners competing in a low-margin industry, where their only variable cost is usually energy. The state is also home to progressive, crypto-friendly, business-friendly politicians. West Texas is the mecca of renewable energy in the United States.

India is lagging behind

Despite the fact that India is home to massive natural resources like solar energy (it is the fourth largest producer of solar energy in the world, with more than a third of its total energy produced from renewable sources), it still lags behind in crypto mining.

The Indian government and central bank have so far enjoyed a love-hate relationship with cryptocurrencies. In the past, they have openly criticized the asset class – and even temporarily stopped banks from facilitating such transactions – also hinting at launching their own digital currency. In 2017, it banned the import of ASCI machines designed specifically for cryptocurrency mining, forcing Bengaluru-based blockchain technology company AB Nexus to stop mining Bitcoin and Ethereum.

States like Rajasthan, Karnataka, Telangana, Tamil Nadu and Andhra Pradesh, which rank among the top five in terms of solar energy production, are ideal candidates for cryptocurrency mining. But India is letting this potential go to waste.

Raj Kapoor, Founder of India Blockchain Alliance says, “Concerns about high energy consumption in mining can be addressed by utilizing the vast natural resources.. But India missed the bus and is missing out on huge revenue generation opportunities by not regulating mining. (When someone mines cryptocurrency, they get a reward that is treated as income and is taxed. There are thousands upon thousands of transactions happening all over the world. If a fraction of that mining takes place in India, the income comes to The state. Not only will it become part of GDP and taxes, but it will also encourage jobs. So, in a way, the entire ecosystem will be affected.)

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