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Cryptocurrencies and cryptocurrency mining, which were formerly foreign concepts to the majority of us, have sparked a flurry of excitement throughout the globe. No one could have dreamed even in their wildest dreams that a virtual currency would one day surpass the value of gold and diamonds in terms of value. A few virtual currencies, especially referred to as cryptocurrencies, such as Bitcoin and Ethereum, are worth far more than a real Dollar, let alone an Indian Rupee, according to some estimates.
Since the creation of the first cryptocurrency, bitcoin, in 2009, the public has remained mostly ignorant about the concepts of cryptocurrency and blockchain until recently, according to some estimates. Individuals who were not familiar with cryptocurrencies were under the impression that bitcoin is a cryptocurrency and that cryptocurrency is bitcoin.
People became aware of the existence of cryptocurrencies as the value of bitcoin and other cryptocurrencies skyrocketed. Over time, individuals have traded and invested in virtual currencies in such large quantities that they have grown to become a $2.2 trillion business as of April 2021, according to CoinMarketCap. The cryptocurrency market now has a total of more than 10,000 cryptocurrencies accessible for purchase and trade.
However, these cryptocurrencies have not yet gained widespread acceptance as a means of payment. On the other hand, some websites on the internet do accept cryptocurrency as a form of payment. Furthermore, throughout the previous several years, cryptocurrencies have been regarded as trading commodities with a mostly rising trend in interest. As a result of the high demand for cryptocurrencies, there are lucrative prospects in the mining industry.
What is bitcoin mining and how does it work?
Cryptocurrency mining is the process of transferring coins that have been cryptographically secured into a transaction. The mining process entails deciphering difficult proof of work algorithms with the assistance of computers – CPUs (Central Process Unit), GPUs (Graphics Process Unit), and ASICs (Application Specific Integrated Circuits) (Application Specific Integrated Circuit).
Mining for cryptocurrencies in unstructured pools can only be accomplished with the pooling of processing resources from numerous machines. Such combined computers work tirelessly together to solve complicated algorithms and generate new coins, and they do so on a continuous basis.
A miner is someone who contributes his or her processing power to the Bitcoin mining process. To compensate him, the miner gets a portion of the cryptocurrency that has been mined, which he may then sell or convert into actual money.
Why has the mining industry’s energy use become a source of controversy?
The rising value of cryptocurrencies provides miners with more financial rewards for the work they do in extracting money from the ground. As a result, a growing number of individuals are becoming involved in the bitcoin mining network. The mining process necessitates the use of a large amount of power generated by coal and other fossil fuels. As the value of cryptocurrencies rises, the complexity of algorithms grows, necessitating the use of greater computational power to decipher and understand them. With the increased computer power comes an increase in the amount of energy required.
Another issue to be concerned about in terms of cryptocurrency mining profitability and algorithm complexity as prices rise is that the mining infrastructure will demand more processing power and energy as a result of the price increase. Despite this, the total number of transactions will stay same.
The BBC revealed the energy consumption figures for Bitcoin in 2021 in order to bring the real-world energy consumption necessary for cryptocurrency mining to the attention of the general public. According to a research by the BBC, bitcoin consumes 121 Terawatt-hours of power per year, which is equivalent to more than the total annual energy consumption of the whole country of Argentina combined. Another study done by Digiconomist found that Ethereum consumes as much power as the country of Qatar.
What is the cause of the massive increase in power consumption?
The majority of the power produced across the globe originates from the combustion of coal and other fossil fuels. Renewable energy sources have been advocated for and tested by the governments of most nations, but the amount of power produced by these sources has been negligible. As a result, we are left with no choice but to burn coal for the sake of energy generation.
It goes without saying that fossil fuels are a finite source of energy and a restricted source of energy production. The excessive energy consumption of mining operations is placing a strain on the limited supply of nonrenewable energy sources available on the market. In addition, mining procedures contribute to the rise in carbon dioxide emissions generated by the excessive burning of coal. Cryptocurrencies and cryptocurrency mining are considered superfluous notions by the majority of environmentalists.
According to a CNBC article, the mining process for Bitcoin alone emits more than 35.95 million tonnes of carbon dioxide per year, which is comparable to the whole annual emissions of New Zealand.
Cryptocurrency mining also generates a large amount of electronic garbage on a vast scale. The components used in mining equipment operate 24 hours a day, seven days a week, resulting in accelerated ageing. Because they can’t be utilised somewhere else, the worn-out pieces are thrown away. In only one year, the bitcoin mining infrastructure generates more than 12,000 tonnes of electronic garbage.
Is it possible to transform mining into green infrastructure?
The present mining infrastructure, without a doubt, is fueled by a vast amount of power. In addition, the mining process is a major contributor to the depletion of fossil fuels and the release of excessive amounts of carbon dioxide into the atmosphere. The deployment of renewable energy, which seems to be a long way off in terms of reality and is too costly to implement, might be an alternate method to reduce the negative environmental effect.
Because of the luxuriousness of renewable solutions, regular miners who excavate coins with the assistance of a restricted number of rigs placed in the house will be unable to make the transition to renewable sources as rapidly as they would want. The availability of enough space is also a prerequisite for the construction of renewable energy facilities. However, by taking a comprehensive strategy to lowering the risks to the environment, mining facilities may grow on the soil of any country. If this is not the case, bitcoin mining seems to have a bleak future.
What exactly do bitcoin mining advocates have to defend?
According to Stefan Rust, the founder of Sonic Capital, in an interview with forks.news, we have increased our level of distrust and scepticism about bitcoins and the amount of energy they use. While this is going on, we have more critical issues to deal with.
In his opinion, some of the concerns about Bitcoin’s carbon impact are unfounded, according to Alex Tapscott, MD of Ninepoint.