The creation of cryptocurrency Bitcoin takes place through a process called mining. Unlike traditional mining, Bitcoin mining is achieved by using powerful computers to decode and solve complex mathematical problems.
According to the University of Cambridge, Bitcoin uses more electricity a year than the whole of Argentina. So notorious for its high energy consumption, that even Elon Musk tweed in May 2021 that Tesla would no longer accept Bitcoin as payment for its vehicles on account of its poor green credentials.
Then, how exactly can cryptocurrency contribute to Earth’s greener future? Besides Bitcoin, there are thousands of other forms of cryptocurrency, collectively termed “Altcoins”, that are far greener. Many investors are now turning towards altcoins as they use less environmentally damaging technology to produce each coin. Thus, heralding a greener future for cryptocurrencies.
Altcoins- The Future of Cryptocurrency
There are thousands of altcoins in the market today. Out of these Ethereum, Solarcoin, Cardano, and Litecoin have shown great potential as greener alternatives to Bitcoin. To understand Altcoins better, let’s take a look at how Litecoins are mined.
Litecoins are similar to Bitcoin, except that they only require a quarter of the time for production. While Bitcoins are mined using sophisticated and powerful computer hardware with high energy consumption, Litecoins on the other hand can be mined with standard computer hardware that requires far less electricity to run.
The other alternatives such as Solarcoin also aim to encourage to adapt to greener ways of mining cryptocurrency. For example, one Solarcoin is allocated for every megawatt-hour that’s generated from solar technology. By doing so, Solarcoins have deduced an ingenious way to reward those who’ve invested in renewable energy.
Cryptocurrency’s Green Streak
While Bitcoin has faced a lot of criticism for its shocking energy inefficiencies, it is still greener when compared to traditional financial systems.
For instance, in the 5 years since the Paris Agreement on climate change, it is reported that 60 of the world’s biggest banks have provided $3.8 trillion to fossil fuel companies. One report also found that 49 percent of financial institutions don’t conduct any analysis of how their portfolio impacts the climate situation of the world.
Banking as a sector is built upon a huge amount of infrastructure which naturally consumes tons of electricity. In addition to this, banks themselves also use a large number of computers and servers, as well as thousands of air-conditioned offices and fuel-guzzling vehicles. It is difficult to estimate the exact amount of energy used by the banking sector, but a recent report suggests that it is twice the amount that Bitcoin does.
So, right now Bitcoin is rightly getting battered for its outrageous energy consumption, but one has to keep in mind that cryptocurrency is still in its nascent stages. With the rise in the popularity of Altcoins that focus on environmental sustainability, cryptocurrency can very well clean up its reputation for excessive energy use and contribute to a greener financial future.
