In the last five years, the cost of a Bitcoin has risen from more than $60,000 to just $1000. Although, this is a piece of great news for the budding millionaires and billionaires it is proving to be a disaster for the environment. The amount of power required for mining the coins using a series of computers has increased by almost ten times which is as much as how much power Argentina alone uses up, reports Bloomberg News.
This power consumption compelled the Tesla Inc chief executive officer, Elon Musk to stop purchasing cars using Bitcoin. China has restricted mining partially due to the load of power it imposed on the power grid. According to Kirsteen Harrison, associated with Zumo Financial Services, which is a cryptocurrency wallet firm in the United Kingdom, as a sustainability strategist stated that “If Bitcoin continues to be seen as carbon-intensive and energy-hungry, it’s a massive risk”.
In response to the change, many miners have placed their computers in Sweden and Iceland, where there is the extensive usage of hydropower and Geothermal power. Others have purchased carbon credits so that the emissions can be neutralized. However, with every bit of kilowatt of greener energy that is being used, it is being increasingly felt that cryptocurrencies must opt for a better way to carry on their business, reports Bloomberg News.
The urgency has forced many entrepreneurs to explore different ways of assuring the security related to digital coins. In most cases, the early cryptocurrencies are based on so-called proof of work, which refers to the calculations that the computers of the miners do.
One of the popular alternatives refers to the proof of stake, in which many parties pledge their coins so that they become so-called validators. These people usually get new coins against checking for the legitimacy related to the transactions and taking a decision about which will be processed first. The need is not for the special equipment but how much every party is agreeing to put up as collateral. The advocates think that the system is secure as the ones who approve these fraudulent transactions usually end up losing their staked coins.
Bloomberg News reports that Ethereum, which is the second cryptocurrency in the world intends to shift to proof of stake from proof of work, stating that this would curb the energy usage by as much as 99.95%. A test version known as Beacon Chain is running parallel along with Ethereum’s well-established proof of work for over a year having more than 250,000 validators and staking $38 billion worth of Ether, as per Etherscan tracker. The original network of this currency is not designed for being used as per the usage level and security requirements of 2021, 2025, or 2030.
The proof of stake developers believes that in proof of work, a sect of the miners controls most of the network that opening ample room for manipulation. However, with the proof of stake, the lone way users will be able to influence the network is by hiking their stakes. Many think that proof of work no longer makes sense for the majority of the chains.