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Cryptocurrency has undoubtedly changed the way people perform monetary transactions around the world. With the highest security offered by the crypto networks, currencies like bitcoins have risen to popularity within years of their inception. Apart from all the extravagance behind these currencies, mining crypto requires a lot of energy.
You’d be surprised to know that even a single Bitcoin transaction can use $100 worth of electricity. The gigantic crypto farms guzzle tons of energy equivalent to a small country. All of this can make you wonder, is bitcoin energy efficient – Swyftx, which is one of the most popular crypto exchanges. Thankfully, there are ways to reduce the energy consumption of cryptocurrency mining, and here are four of them.
1. Change the Mining Mechanism
Cryptocurrency mining involves solving complicated problems and puzzles to unlock coins. Crypto mining uses a proof-of-work mechanism notorious for guzzling up a lot of energy. There is a need to change the way crypto mining works. Proof of stake and proof of authority are two promising alternatives that could help to eliminate the proof of work mechanism. The proof of stake mechanism works on the coin’s effectiveness, which means it doesn’t require computational power to solve complicated problems.
2. Switching to Renewable Energy
It’s shocking to know that Bitcoin mining consumes 69.85 TWh of electricity per year. As the primary energy sources are based on fossil fuels and coal, you can imagine the CO2 emission by crypto mining. That is why Elon Musk stopped taking Bitcoin payments for Teslas. Such immense energy use creates a need to find alternative energy sources for crypto mining. Many crypto farms have already switched to renewable energy sources like solar energy, and many of them still rely on hydropower. The countries with the established infrastructure of renewable energy sources can subsidise the crypto miners to encourage them to switch those sources. It will not only make crypto mining more energy efficient but also play a significant role in reducing the carbon footprint.
There’s another aspect to this too. As the US Energy Information Administration stated, only 20% of the energy produced in the US in renewable energy. If Bitcoin mining companies start using renewable energy, it will put additional pressure on the power grids.
3. Compensating for CO2 emissions
Mining rigs can make provisions to compensate for the CO2 emissions caused by them. As mining farms can produce a lot of heat, this heat can warm the houses in colder areas. Mining companies can also take up reforestation programs around their facility to help reduce their carbon footprint. Enhancing the existing infrastructure can also play a significant role in reducing energy usage. Colder countries can leverage their lower temperature instead of putting more infrastructure to cool down their facilities, significantly reducing their power usage.
4. Make CSR Activities Mandatory for Mining Companies
Government can bring cryptocurrency mining companies under their environmental regulations and make corporate social responsibility (CSR) mandatory. It would also put restrictions on the companies that do not match the threshold of CO2 emissions and bring them under regulations. Is Bitcoin energy efficient? – Swyftx highlights whether Bitcoin and other cryptocurrencies can be self-sufficient and reduce their energy consumption in the coming future.
It would be safer to say that Bitcoin can eventually be energy efficient in the near future with the right strategies and newer energy efficient technology. Until then, keep your fingers crossed.
