After recent collapse of cryptocurrencies, Bitcoin and Ethereum have started to implement measures to reduce its negative impact on environment and reduce carbon emissions. Will it be possible? Read details in my article!
Recently cryptocurrency has fallen in price as businessman Elon Musk has suspended the sale of his products for Bitcoin due to its negative impact on the environment.
Is bitcoin really bad for the environment?
It actually is. Economists have calculated that the cryptocurrency industry contributes to annual carbon dioxide emissions comparable to those of Hamburg or Las Vegas.
Researchers estimate that 45.8 terawatts of electricity are spent annually to maintain the bitcoin blockchain network. In terms of carbon footprint, it turns out that when such an amount of energy was generated, from 22 to 22.9 megatons of carbon dioxide were emitted into the atmosphere.
The spread of technology beyond cryptocurrencies is multiplying energy consumption, along with a growing carbon footprint. The emission of carbon dioxide that accompanies the production of electricity, in turn, leads to an increase in the greenhouse effect on the planet.
Talk about the impact of bitcoin mining on the environment has been going on for several years. Recently, a tweet of Elon Musk has triggered the problem.
“We are concerned about the rapid increase in the use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Elon Musk stated.
Tesla has suspended the sale of its products for Bitcoin. Within days of the tweet and the company’s announcement, the price of digital gold dropped below $ 40,000.
The fall in the rate from the historical maximum exceeded 40%. The price did not stay above the 200-day moving average, which is perceived by many technical analysts as a kind of border between the bull and bear markets.
With growing attention to the environmental impact of cryptocurrencies, Bitcoin and Ethereum are racing to cut carbon emissions. For example Ethereum, the second largest cryptocurrency in the world, will receive a software update that will dramatically reduce its carbon footprint.
The Ethereum Foundation, a non-profit organization that works to maintain the network, announced this week that the cryptocurrency will move to a new method of recording and verifying transactions that will drastically reduce carbon emissions.
Computers around the world perform cryptographic mathematical equations to validate and secure transactions on the network. Solving these equations requires a huge amount of electricity to provide computing power.
Most of the network participants are required to confirm transactions, which acts as an anti-fraud check.
Karl Bikhuizen, developer of the Ethereum Foundation, wrote on his blog that while there are no “specific energy statistics” for Ethereum, his “rough” estimates suggest that changing infrastructure will reduce energy consumption by about 99.95%. The foundation hopes to complete the shift in the “coming months”.
According to him, if now Proof-of-Stake Ethereum consumes energy equivalent to a “medium-sized country”, then after switching to a new method of verifying transactions, the energy consumption will be reduced to the scale of a “small town”.
The race for carbon-free bitcoin mining has already begun.
Founded in early 2021, Gryphon Digital Mining is completely carbon-free by using hydropower. The company raised $ 14 million in April to move the project forward and recently signed a crypto-climate agreement to achieve zero greenhouse gas emissions for all signatories by 2040.
“There are, of course, more important factors contributing to climate change. However, the carbon footprint of cryptocurrency mining is large enough to discuss the possibility of its regulation, especially in those regions where electricity production is especially carbon intensive. One of the ways to improve the ecological balance is to unite large mining farms and transfer them to renewable energy sources, “- quoted the lead author of the study, a researcher at the Technical University of Munich and MIT Christian Stoll in an official press release.
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He uses to dedicate part of his life to inspire others and help them achieve the most out of their lives. Since he was 20, he had successfully founded and managed several companies operating in the field of management consulting, wealth management and fintech. He is Member of Institute of Directors in London, Member of Changer Club in Riga, Member of Fintech Association of Hong Kong, Member of Singapore Fintech Association, Member of Non Executive Director Association in London and Member of Alumni Network of Draper University in San Francisco. He loves travelling, he is a cigars lover, an amateur golfer and a dapper man.
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