So, if you’ve been paying attention in the last few years, you’ve seen the rise (and fall, and rise again) of cryptocurrency into the mainstream. What used to be a very niche endeavor now makes headlines all over the world. You can even purchase crypto on your phone, through various apps like Coinbase, Robinhood, Uphold, and many more. Cryptocurrency uses something called “blockchain” to verify transactions. Simply put, this means computers across the world lend their processor power to help power that blockchain technology. This seemed like a simple enough task in the beginning when transactions were low, and there were only a few types of crypto. Now that crypto is in the mainstream, there is concern about one of the very basic things that make the system work – electricity.
Now that cryptocurrencies like Bitcoin, Ethereum, Dogecoin and countless others are using a similar type of blockchain technology, the demand for these computers to crunch more numbers has grown exponentially. It is estimated that one Bitcoin transaction takes 1,544 kWh to complete. That is almost 53 days of the consumption of the average US household! As a result, larger and larger rigs are being constructed to accommodate the power requirements, especially in countries where energy consumption and environmental concerns are largely unregulated. There are large crypto factories in countries like Kazakhstan. Some crypto miners in China have considered moving to Texas, due to their lack of environmental controls.
What can be done about this massive use of energy? Though Bitcoin remains the most valuable and power consuming of call cryptocurrencies, there are many other cryptocurrencies that claim to have made improvements to the blockchain technology. Crypto advocates such as Elon Musk and Vitalik Buterin have claimed to be working on ways to simplify the blockchain and reduce energy consumption. Even as the revise old currencies, new ones like Ethereum 2.0 are coming into the market almost daily. Many large blockchain outfits are turning to solar power in order to reduce their carbon footprint. With smarter practices like these, the energy consumption could be greatly reduced!
No one knows where the future of cryptocurrencies lie, but one thing is for certain: the more efficient the system can be, the more likely it is to stay in the mainstream as a viable currency and investment!