Can Bitcoin Go Green And Reduce Its Carbon Footprint?February 1, 2022
One of the biggest drawbacks to using Bitcoin or some other cryptocurrency is that it is a huge energy hog. There are literal towns being heated by the output of the servers used in mining Bitcoin so that should tell you something about how much energy it uses.
With climate change being at the forefront of many people’s minds, it has shown a spotlight on how Bitcoin needs to go green. Anytime people buy Bitcoin with debit cards, there is a transaction that has to be registered on the blockchain. Before you start investing in Bitcoin, it is crucial to understand what is Bitcoin, Blockchain and how bitcoin transactions are made through blockchain. You can even enroll yourself in courses, or take certified training like Blockchain training from experts to understand Bitcoin in detail. To verify the transaction, miners will compete to create the encryption for the block.
All of this activity uses a lot of data and computing power so there need to be huge server banks to do this. And all of these supercomputers use a lot of power to cool themselves so they don’t literally explode or light up on fire. Are there ways around this?
In this article, we will explore the idea that Bitcoin can one day go green so even the most environmentally friendly investor can buy it guilt-free.
The most obvious way around the issue of using lots of energy is to focus on renewables like solar, wind, and other means. There are lots of areas that produce more than they need for local use so the extra could certainly go towards Bitcoin mining.
The problem with this is that it is not consistent enough year-round to give the Bitcoin miners enough renewable energy. And the batteries are not enough to power these servers in the downtime. So this ends up meaning that the local needs will end up using the renewable energy and the servers will still use things like coal or other fossil fuel power.
An answer to this is to send the majority of the servers to areas where there is plenty of room, cheap labor, and abundant sun. There are investors putting up mining centers in Africa where there is no shortage of sunlight. With some strategic positioning around the world, these mining centers can be powered with renewables and even provide good jobs to locals that wouldn’t have had much access ordinarily.
There are even a lot of servers being placed in areas where geothermal energy is prevalent and it costs almost no money and uses no fossil fuels.
Move to Proof of Stake
Part of the issue with how Bitcoin is mined that contributes to using too much energy is how the verification of the blocks occurs. Right now it uses Proof of Work to complete. This sets miners against miners to be the first to finish the encryption to get the reward of Bitcoin. It uses a lot of energy to do this.
Instead, there is another system called Proof of Stake that is far less energy-intensive. Instead of a mad competition, it uses an algorithm to award the encryption of the block to whoever holds the most currency, or stake. With less activity required to seal the block, there is less energy required.
*This article has been contributed on behalf of Paxful. However, the information provided herein is not and is not intended to be, investment, financial, or other advice.