When it comes to cryptocurrencies, or digital currencies that use blockchain technology, we often see it discussed in terms of its environmental impact, its potential to disrupt financial institutions and its political implications. But what exactly is a cryptocurrency? What environmental impacts does it have? And how can we use it to change the world?
Before cryptocurrencies were created, they were thought to be the next big thing in finance. And, in fact, the first Satoshi Nakamoto-created cryptocurrency, Bitcoin , was released in 2009. Since then, the concept of cryptocurrencies has been met with a lot of controversy. Many see cryptocurrencies as a new way to launder money, or a way to fund terrorism. Others say it’s the future of currency, that it’s here to stay. But what is a cryptocurrency anyway?
Cryptocurrency has been getting a lot of attention lately, and for good reason. It’s a tried and tested method of transacting online that has been gaining popularity as more people begin to understand its benefits. Unlike the go-to and well-known digital currency, Bitcoin, there are no limits to how many Cryptocurrencies there can be. They can all be set up at the same time, and unlike Bitcoin, the supply is not limited. There are now more than 500 Cryptocurrencies available to choose from, and a lot of these Cryptocurrencies aren’t even available to purchase with traditional currency.
I grew up in an era when most people didn’t even use debit cards, having been born in the 1980s. There was no such thing as smart phones or the internet back then, and fiat money and checks were the standard.
Back then, most individuals didn’t even have access to computers. They didn’t have a graphical user interface (GUI) like my uncle’s computer, if they did. To play the amazing games he had on it, like Meteroid, I had to master MS DOS fundamentals.
After a few decades, the whole globe has turned upside down! As credit and debit cards have become the standard, cash is gradually becoming obsolete. Everyone now carries a powerful computer on their person, and the internet connects the whole globe.
The technological revolution has also resulted in the development of cryptocurrencies, or virtual money. Cryptography and a network of computers safeguard these digital currency. Cryptocurrencies have been around for over a decade, and there are currently over 10,000 of them.
The energy required to power and operate the networks of computers that power and run these cryptocurrencies is considerable. Bitcoin is the most widely used cryptocurrency, using more energy than nations such as the Netherlands.
Some investors are searching for greener options after recent disclosures about how much energy cryptocurrencies like Bitcoin consume.
Then there are green cryptos.
A green coin does not contribute to CO2 emissions on the earth. These cryptos are powered by renewable energy sources.
When Tesla announced that it will no longer accept Bitcoin as a method of payment, Bitcoin (BTC) and other cryptocurrencies suffered a blow. It aided in the halting of Bitcoin’s historic bull run, which culminated in a new all-time high of $65,000 in early 2021.
Cryptocurrencies are virtual currencies that are secured by encryption, making double-spending and counterfeiting almost difficult.
These assets are often stored on blockchains, which are decentralized networks of computers. By cross-checking transactional data with prior blockchains, the blockchain guarantees the network’s integrity.
Mining is the process of adding new coins to a blockchain, and it consumes a lot of computing power and energy. These miners also help to maintain and grow the blockchain, which adds to their energy requirements.
As the network’s computers solve complex mathematical problems, they are usually rewarded with freshly issued cryptos.
Bitcoin mining consumes more energy than Argentina, the Netherlands, and the Philippines combined. It accounts for 0.55 percent of global energy consumption.
When I initially started mining cryptocurrencies like Bitcoin in 2016, I had no idea how much energy it took. Finding a miner that made you money after deducting the cost of operating the computer was like finding a needle in a haystack back then.
At the time, Bitcoin was still only worth a few hundred dollars, so the little number of BTC I made from mining looked trivial in comparison to the rise in my power bill as a result of my mining operations.
Why Do Green Cryptocurrencies Have the Potential to Be the Future?
Due to its popularity and the complexity of the mining process, Bitcoin consumes more energy than any other cryptocurrency presently accessible. The majority of cryptocurrencies are mined in large computer centers powered by coal-fired power plants.
The use of fossil fuels to power cryptocurrencies such as Bitcoin contributes to global carbon emissions, which exacerbates climate change.
The Bitcoin blockchain’s method of verifying transactions and issuing new currency is inefficient by design, and many other cryptocurrencies use similar methods.
Connecting a machine to the blockchain is the first step towards mining Bitcoin. The method necessitates the use of a large amount of computing power to solve complex algorithmic problems using a 64-digit answer known as a hash. The validity of Bitcoin transactions on the blockchain is verified using these hashes.
The higher the number of miners vying for this hash, the higher the mining process’ energy needs. Mining ensures the blockchain’s functioning and security by verifying and auditing new transactions. The hash is used to verify the validity of a block.
It’s a fantastic method in terms of security since it makes it almost difficult to cheat the blockchain.
However, regardless of how many miners work on a block, only the computer that generates the right hash receives a reward. The remaining miners were just wasting their time. When you realize that nearly a billion people across the world do not have access to power, it’s difficult to explain the massive energy waste.
Cryptocurrencies such as Bitcoin, Ethereum, and Dogecoin, on the other hand, do not have to contribute to carbon emissions by default. Energy is all that is required for miners to operate their computers. It makes no difference how the energy is produced.
Some mining sites in China, for example, are primarily powered by hydroelectric energy. Electricity generated from the combustion of fossil fuels now powers the majority of the world, making it the most readily accessible power source.
Given that one of the most common critiques of Bitcoin and other cryptocurrencies is their high energy needs, you may anticipate a growing number of mining centers to convert to renewable energy sources to satisfy investors concerned about their effect on CO2 emissions.
If this does not occur, the worldwide movement toward renewable energy will ultimately force all cryptocurrencies to become green.
Cryptocurrencies with the Lowest Environmental Impact
While Bitcoin and many other cryptocurrencies have a long way to go before being called green cryptocurrencies, there are cryptos that do not contribute substantially to global carbon emissions. These are some of them:
- SolarCoin is a cryptocurrency that encourages people to invest in solar panels and use them. Every time a Megawatt hour of solar energy is produced, a SolarCoin is created.
- Cardano is a cryptocurrency that is used for mining. Cardano is based on a miner’s proportion of coins rather than the total processing power of their machine, substantially reducing energy consumption. It was created with the help of peer-reviewed research and evidence-based techniques.
- IOTA: To generate new currencies and run its network, this cryptocurrency use the Tangle technology. It offers an alternative to traditional blockchain-mined cryptocurrencies such as Bitcoin, which have significant energy requirements.
- Nano: To process transactions and generate new currencies, Nano employs a more energy-efficient network known as a block-lattice.
Bitcoin, Ethereum, and other cryptocurrencies have caught the attention of many investors, but they also have a lot of critics. Cryptocurrencies are often associated with illegal activities, like money laundering, because they are often used to fund terrorism or other illegal activities. However, this is far from the truth. These cryptocurrencies have a number of legitimate uses.. Read more about is cryptocurrency sustainable and let us know what you think.
Frequently Asked Questions
What does it mean when crypto is in the green?
When a cryptocurrency is in the green, it means that it is increasing in value. This is the opposite of when it is in the red. What is the most efficient way to use crypto? The most efficient way to use crypto is to buy it low and sell it high
What is the most green cryptocurrency?
We are currently tracking 3,865 cryptocurrencies. The most green cryptocurrency is Ethereum with a carbon footprint of 0.0026 tCO2/KWh. The least green cryptocurrency is Bitcoin with a carbon footprint of 0.0098 tCO2/KWh. Q: How many cryptocurrencies
What cryptocurrency is environmentally friendly?
By its very design, the blockchain is a much more energy efficient way of managing a distributed ledger, which is why it has been so widely adopted by cryptocurrencies. A single bitcoin transaction uses roughly the same amount of energy as a single U.S. household in a week. Q: I
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- what is green cryptocurrency
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- is cryptocurrency sustainable