Greenest Crypto: Solving the Bitcoin (BTC) Energy Problem
#
The chief feature of Bitcoin (BTC) – its highly secure mining, has become its bane. Criticism of Bitcoin’s energy use intensified in 2021, culminating with Elon Musk’s recent tweets which sent BTC spiraling down 30% from its peak.
Bitcoin’s network reportedly consumes more than the entire Netherlands each day. But that number may be put into perspective – the network’s energy would be equal to only 2.8% of the electricity usage in the USA.
Recently, Bitcoin mining reached a peak above 180 TH/s, an activity that would require more than 1 million ASIC machines. At the moment, it is unknown which models of mining rigs are in use, as their calculation capacities and energy efficiency vary.
What’s Bitcoin’s Mining Electricity Mix?
Then, there is the issue of Bitcoin nodes, which are usually close to 10,000. Most of the nodes are concentrated in Europe and the USA, with only 184 nodes in China. The Chinese nodes are all concentrated in the vicinity of the Three Gorges Dam, which is one of the significant sources of mining using downstream hydroelectric power.
One of the reasons for the numerous nodes in the US and Europe is that running crypto nodes often uses cloud services such as AWS. Nodes do not require excessive use of electricity, as they simply relay transaction information through the usual Internet request infrastructure.
To compare the Bitcoin energy usage, it is getting close to the global electricity usage of all data centers as of 2018. Internet usage has continued to grow, adding to the cloud infrastructure. Bitcoin mining is now at 179 TW/h levels, catching up with using about 1% of the world’s electricity.
The Bitcoin electricity mix is unknown right now. There may be mining farms that use coal-generated electricity. But some of the biggest mining farms are built in regions with significant hydroelectric power, as well as a cooler climate. So while BTC is power-hungry, it often uses renewable resources and even recouped water.
Bitcoin mining is voluntary and decentralized, and there is no way to discourage potential miners from choosing coal-powered electricity sources.
Are There More Energy Efficient Coins?
The problem of mining has been solved multiple times, with the creation of proof-of-stake coins. Transacting in those coins uses the same kind of energy that would be used for an Internet request.
The Bitcoin network carries around 550,000 transactions per day. Proof-of-stake networks with a faster block creation carry millions of transactions per day, with each transaction more energy-efficient.
Networks like Ripple’s XRP use a collection of servers, with just a fraction of the BTC power cost. XRP reportedly uses 474,000 kW/h annually, just a fraction in comparison to mined coins like BTC and even Ethereum (ETH).
Cardano Network Boosts Efficiency
The efficiency of a proof-of-stake network can also been estimated, using the available block generation and transaction data. The Cardano community calculated the energy use between 8,600 mW per year and 12,700 mW per year.
Cardano transactions also have a mix of cloud-based nodes, which adds to the efficiency of not running an entire machine to secure the network. The estimation sees Cardano as using power equivalent to between 1,200 and 860 US households per year.
NANO Relies on Consumer Electronics
The NANO network was engineered for efficiency, and can run entirely on consumer electronic devices. With this in mind, the NANO network is currently underused. Hypothetically, it could handle the same level of transactions as the VISA network.
Unofficial calculations see NANO as capable of carrying 7,000 transactions per second, while consuming a negligible amount of power. While the network’s capacity sits empty, block production is not as energy-intensive. Conversely, even if there are just a handful of BTC transfers, creating the next block still uses significant energy as all ASIC farms compete for the reward.
Hedera Hashgraph Goes for Offsetting Carbon Footprint
The Hedera Hashgraph (HBAR) network is similar in its energy requirements as other proof-of-stake blockchains. But the project has added an extra dimension in its green goals. The network carries the DOVU token, which serves as a crypto-based carbon offset market.
In theory, any crypto asset could use some fraction of “dirty” energy. Crypto coins and tokens are used globally, and rely on the respective country’s electric grids. Then, there is the issue of electronic waste even as more nodes are cloud-based.
To counteract the effects, the Algorand project has treated its blockchain as the environmental cost of doing business. Recently, Algorand partnered with a carbon offset consultant to make sure the final energy use and carbon dioxide equations make the project neutral or even carbon-negative.
For now, it is unknown what effects the wider adoption of crypto assets would have. Proof-of-stake networks still have significant capacity to carry millions of transactions, as some of them carry almost empty blocks. It is possible some of the networks will have a more significant power usage if they had more wallets and nodes to connect. There is also some inefficiency of connecting decentralized nodes, as each one must receive the latest state of the transaction ledger.
Yet Bitcoin remains the most contentious network, with Ethereum coming second with a growing ASIC mining base and energy usage. Other mined networks still use a fraction of the Bitcoin electricity, but have the capacity to grow into more significant usage.
#
Uphold makes buying crypto with popular currencies like USD, EUR and GBP very simple with its convenient options to swap between crypto, fiat, equities, and precious metals.
With over 50 coins and an obsession with security, Kraken is one of the safest places to buy and trade crypto.
Kraken has a good reputation for security and protection of your funds and operates across the USA (except NY), Canada, the EU and Japan
Based in Charleston, South Carolina. Serves over 184 countries and has done over $4 billion in transactions. Offers convenient options to swap between crypto, fiat, equities, and precious metals.
A review of the many options for crypto exchanges and what the main differences are
Celebrities on social media can have huge followings creating enormous power to influence their followers. We look at who are the most influential and some of the potential risks of following their advice
An innovative digital asset utilizing a fully decentralized consensus protocol called Ourobouros. The network aims to compete with Ethereum in offering smart contract functionalities. However it is lightyears behind Ethereum in terms of adoption.
An early alternative to Bitcoin, LTC aimed to be a coin for easy, fast, low-fee spending. LTC offers a faster block time and a higher transaction capacity in comparison to Bitcoin.