There’s no doubt that cryptocurrencies are here to stay and that blockchain and web 3.0 are the technologies of the future.
However, one of the most common critiques of Bitcoin is the ungodly amount of energy it uses. And make no mistake, it’s a fair criticism; Bitcoin uses a lot of electricity.
According to the Cambridge Bitcoin Electricity Consumption Index, it consumes about 120 terawatt-hours (TWh) of power a year. That is more than 0.5% of the world’s total usage. While that number may not seem extraordinary, consider this… Bitcoin consumes more power than Argentina, a country with 45 million people and Pakistan, with a population of 220 million!
In this age of climate change worry and environmental awareness, it is ironic that The Next Big Thing is polluting like crazy, often using power from giant Chinese coal-fired power plants. It has even been suggested emissions from Bitcoin could exceed the global savings currently made by driving electric vehicles, the article notes.
However, it looks like there is another way…
A recent change in how Ethereum works cut its power consumption by country-sized amounts. Ethereum is the second-large cryptocurrency by value and the amount of electricity saved thanks to the change is similar to that used by Ireland and Austria.
Like Bitcoin, Ethereum relies on a giant blockchain, constantly updating the database and logging every transaction. Previously, this was maintained and verified by a system called Proof of Work. Companies and volunteers were rewarded with new cryptocurrency coins for helping run the network. This system encouraged businesses to set up massive warehouses of computers running 24-7.
But Ethereum recently switched to a system called Proof of Stake, where the chance of creating a new coin no longer depends on the amount of computing work completed. The result… Ethereum’s electrical energy consumption fell by at least 99.84%.
This could be a green way forward for Bitcoin and other cryptos.