The fact is–cryptocurrency mining is wasteful. That’s because it works on a process called ‘proof-of-work,’ which requires solving complex calculations within minutes to confirm each transaction made by users.
This process needs specialized hardware for those who wish to participate in this ‘mining.’ Therefore, expensive equipment takes lots of power to operate. This means high costs for consumers and high levels of pollution emitted into our environment.
Cryptocurrency Mining Consumes More Energy Than Entire Countries
Let’s look at some statistics around the energy consumption of cryptocurrency mining. First, Stanford University estimates that cryptocurrency mining consumes more energy than the whole of Switzerland.
Our friends over at Digiconomist estimate that cryptocurrency mining consumes more energy than 160 countries, including Romania and Portugal. In addition, the University of Cambridge has released its first Global Cryptocurrency Benchmarking Study, with its findings indicating that the annual electricity consumption of global cryptocurrency mining is equivalent to that of 821,000 homes in the US or 3 million people in Kenya.
It’s almost impossible not to see an issue when you buy cryptocurrency. If cryptocurrencies were a country, it would be using one of the top 30 highest amounts of energy worldwide.
Proof of Stake replaces wasteful mining for generating new blocks.
Instead of solving computational puzzles, the cryptocurrency protocol has been adapted to include a new consensus mechanism called “proof of stake.” With proof-of-stake, anyone with a certain amount of tokens can validate transactions and create new blocks.
The only requirements are an internet connection and the ability to keep your wallet open to help process transactions. Proof-of-stake has numerous advantages compared to mining. It’s more energy-efficient, more secure, and more decentralized.
Proof of Stake Cryptocurrencies Are on the Cutting Edge of Blockchain Technology
Proof of stake is a different way to secure the blockchain from Proof of Work when purchasing cryptocurrency. So how does it work?
For example, let us say someone wants to buy some coins from cryptocurrency markets and use the cash instead of their card directly on a website. The parties involved will stake their cryptocurrency tokens in return for a chance at winning a reward.
This rewards miners or stakes with coins and then completes transactions. The reward is an incentive to keep them honest by having them “skin in the game.”
As you can see, this process uses less electricity than mining cryptocurrency, which makes it more environmentally friendly and also has many other benefits:
● It’s more secure because there’s no need for computing power as with Proof of Work – instead, validation occurs through staking.
● It scales better than Proof of Work. Hundreds or even thousands of transactions happen every second.
● Transactions are faster and cheaper because there’s no need to solve complex mathematical problems.
● There are fewer technical requirements for validating blocks on the blockchain.
Solar-Powered Mining Is a Win-Win
The idea of powering cryptocurrency mining devices with solar power may seem crazy. However, there are already many companies that have successfully done this.
You can provide electricity to your mining rigs and other energy-consuming devices by using solar panels to deliver electricity to your home. It can also be used for business while simultaneously earning cryptocurrency or other cryptocurrencies.
Some people in the United States have chosen to install solar panels in their homes and businesses to lower the cost of their electric bills. The average price of a home-installed solar panel in the United States is $3.05 per watt, equating to around $15,000 for a 5 kW system.
If you’re trying to mine cryptocurrency at home on a budget, this option isn’t ideal as it will take years, if not decades, before you make back your initial investment from lower electric bills alone. This will not force you to convert cryptocurrency to fiat and leave you with more coins.
However, if you choose to invest in cryptocurrency by purchasing a dedicated cryptocurrency miner like an Antminer S9, for example, then it can be beneficial for you. You can power that device with solar panels. Instead of drawing more electricity from the grid and paying higher electric bills each month, you can do this.
The Blockchain Could Become the Future of Energy Production
Peer-to-peer energy trading networks are being used today in several countries, including Australia, the U.K., Germany, and the Netherlands. In the future, they could be a solution to the increasing demand for power while reducing the need for expensive power plants.
Electricity can be transferred between you and your neighbors in a peer-to-peer energy trading network without going through traditional power plants or utility companies. This means that you can sell your excess solar power directly to other consumers and make money.
The technology behind this is called the blockchain. It allows you to track all transactions from one place and avoid fraud.
You are keeping your ecological impact low benefits you and everyone else on this planet. It’s easy to get discouraged by the sheer size of our problems, like climate change or pollution. But remember, even small changes in your lifestyle can positively affect the environment!