Why is Crypto Mining Bad?
The PumaPay (PMA) token has been minted and a set number of tokens are in circulation, meaning that the token is not mineable and thus does not have any of the negative effects linked to crypto mining. Where minting is a simple and energy-efficient way of producing cryptocurrencies, crypto mining, on the other hand, is an arduous, costly and environmentally not sustainable process.
Crypto mining has been described as a gold rush. With the use of cryptocurrencies growing exponentially, many have ventured into exploring the profitability of cryptocurrency mining. Also known as altcoin mining, cryptocoin or Bitcoin mining (after Bitcoin the most popular of all cryptos), cryptocurrency mining is the process of solving complex problems to verify digital crypto transactions and add them to the blockchain digital ledger by using computer hardware. The procedure is highly complicated, and the energy consumed to solve the algorithms is huge, creating a massive carbon footprint.
So, for many this is a small price to pay when it comes to technological innovation, while for others, crypto-mining is simply harmful to the environment, especially when considering the somewhat limited rewards and excessive electricity consumption. Alternatively, using carbon-free energy to mine cryptocurrencies such as Bitcoin is seen as promising, despite the problematic overconsumption of the world’s cheapest renewable electricity.
Proof-of-Stake vs. Proof-of-Work
At the heart of the debate on crypto-mining lies the question of energy consumption, with some advocating that proof-of-stake (PoS) protocols are better than proof-of-work (PoW) ones, because they use less energy. Proof-of-stake is a different way to validate blockchain transactions. Unlike proof-of-work where there are rewards given to miners who have solved the algorithm, in proof-of-stake, there are no such rewards. The creator of the new block is chosen according to their wealth or “stake” and they are responsible for the transaction fees. For example, Ethereum’s Vitalik Buterin wants to transition to PoS to reduce the use of electricity and energy costs, which are currently being paid with fiat currencies, adding more pressure on the value of digital currencies. It is difficult to grasp how much energy is really consumed, but, according to Motherboard, a single Bitcoin transaction in 2015 required as much electricity as that used by 1.57 American households daily. In 2017, Digiconomist reported that the Bitcoin network’s yearly energy consumption was 32TWh, as much as that of Denmark, while each transaction used enough electricity to power homes for nine days. The numbers are much higher now but, in the long term, Bitcoin mining energy consumption will hopefully decrease as more sustainable and energy-efficient ways are discovered and put in place, or so they say. Wired mentions that by 2019 the bitcoin network will require more electricity than the US is currently using, while by 2020 it will be using as much as the entire world does today. With this in mind the argument goes that this is simply unsustainable. Especially, at a time when the effects of climate change are felt across the globe, it is easy to see why cryptocurrency mining is a concern.
But are fiat currencies less guilty?
Many choose to compare crypto-mining’s negative effects to that of printing fiat currencies. The production of currencies other than cryptos has also an impact on the environment. Especially when many Fiat currencies manufactured by the Royal Mint are made from plastic and metals which are considered finite sources. While the Royal Mint recycles materials, monitors waste production and manages the consumption of large quantities of water and energy to meet appropriate environmental management standards, this nonetheless, has a significant effect on the environment. Fiat currency has been the standard for many years and has added to the increase of greenhouse gas emissions and the depletion of the earth off its natural resources. Bitcoin and cryptocurrency defenders argue that cryptos are relatively recent, so perhaps they need more time to develop a more sustainable plan for the consumption of energy.
Green energy has become more affordable and accessible, with many miners moving to places such as Iceland, Oregon, and Canada where energy is cheaper. China and Russia for example, are considered to offer some of the cheapest electricity in the world. Bitcoin miners are taking advantage of cheaper energy and, as Bitcoin advocate Andreas Antonopoulos claims, “the decentralization of bitcoin is driving the decentralization of energy production,” so that miners can pay to use energy produced by renewable power projects that would otherwise be wasted. Green energy projects have not been the only possibility, as in 2017 PRTI and Standard American Mining managed to turn trash into crypto. PRTI explained: “The business of turning tires into oil, steel, and carbon is lucrative, but the true value lies in monetizing the power in a new way…We literally built a crypto mine on top of a persistent, renewable energy source that is completely independent from the utility grid, where we have 100% control over the power generation via the tire feed stock. Solar power can’t do this. Wind power can’t do this. Hydro power can’t do this. Only waste-to-energy power can — and PRTI is a global leader.” But is using up renewable energy a viable solution?
Using renewable energy is not the same as saving energy, and the existence of more renewable energy projects still equates to zero-carbon electricity. So, electricity is still consumed, and to stop climate change we need lower emissions. This is why, many support the proof-of stake strategy for mining as it consumes no energy.
Moving forward, things might not change very soon, but given that the cryptocurrency world has always been driven by innovation and change, and there are already signs, from using renewable energy and even transitioning to the great potential of proof-of-stake, things will eventually evolve. Indeed, crypto-mining has catastrophic effects on our environment, but efforts to provide alternatives to use energy more efficiently are the only way forward, if we really want to fully explore cryptos’ power-transformative possibilities. Do you agree? Or do you think crypto mining should continue as is? Share you thoughts on Facebook, Telegram, Reddit and Twitter.