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Energy Demand of Cryptocurrency is Becoming a Growing Concern
There are several disadvantages that cryptocurrency has. It’s volatile. Regulation around it is in its infancy stage. But perhaps the biggest setback it brings is the amount of energy it consumes in order to achieve sustainability.
Blockchain, the technology that underpins Bitcoin and other cryptocurrencies, uses a system where computers solve complex computations in order to create the next block. As the chain grows, so does the computing power needed to calculate the next transaction.
A recently published analysis by economist Alex de Vries estimates that a single transaction requires power equal to the monthly average energy consumption of a household in the Netherlands. However, the calculations use by de Vries to reach this conclusion relies heavily on a lot of assumptions such as mining chip prices and revenues, energy costs, and stable Bitcoin value, the last one being the most questionable.
Jonathan Koomey, an energy economist at Stanford University, disapproved of de Vries’ assumption since the categories used to reach the conclusion has a lot of room for error and inaccuracy. De Vries understood why Koomey disagrees and said that even though the process is questionable, it still needs to be done.
He argued that since there’s no publicly-available information regarding power consumptions of crypto miners, the calculation might shed some light on how legal groundwork will take shape surrounding the usage of energy by cryptocurrency. It can serve as one of the baseline information moving forward.
Moreover, despite de Vries assumption being called into question, the issue of Bitcoin and its impact on global high energy demand remains. This is why companies in the crypto realm are turning to green energy as a means of energy source to maintain cryptocurrency’s sustainability. Fortunately, the price market around renewable energy has decreased in recent years and has even overtaken coal as the go-to power source for public and private sectors alike.
It also helps that investors can increase their revenue by incorporating green technology in their mining farms, thus resulting in the reduction of their carbon footprint as well as operational cost. Wind and solar are still at the top of the green energy tech but areas with hydroelectricity capabilities are also gaining popularity. With the boom of Bitcoin, cryptocurrency, and blockchain tech in several giant markets, the urgency to find the answer to the growing energy demand of this innovation is becoming more and more imperative.