The demand for cryptocurrencies is growing rapidly, but so have the concerns about its regulation and environmental impact. Cryptocurrencies are mined, for which a lot of energy is used and it leaves a carbon footprint in the environment.
The demand for cryptocurrencies is growing rapidly around the world, but there are many concerns regarding its widespread adoption as a method of financial transactions. Questions are raised about the regulation of cryptocurrencies. It also affects the environment. Bitcoin is the most popular of cryptocurrencies, but in the past, when Tesla founder Elon Musk backed another cryptocurrency Dogecoin, raising concerns about its environmental impacts, Bitcoin saw a significant drop.
How does cryptocurrencies harm the environment?
Talking about its environmental damage, Elon Musk said that the energy usage trend (in the last few months) is very high. Musk meant about the energy spent on mining bitcoins. High powered computers are used in the mining of cryptocurrencies and this process takes a lot of energy. In most cases, this process relies on fossil fuels, especially coal. Analysts at Deutsche Bank estimate that bitcoin uses almost as much electricity in a year as a country like Ukraine does. According to Digiconomist, the cryptocurrency Ethereum uses the same amount of energy in a year as a country like Switzerland.
The electrical waste and carbon footprint generated by these cryptocurrencies also do not paint a good picture. According to another report by Digiconomist, Luxembourg generates as much e-waste in a year as bitcoin e-wastes. Comparing the carbon footprint, it is at par with Greece. The footprint of Ethereum is equal to the annual value of Myanmar.
Mining geography changed in the last six months
However, new data from Cambridge University has shown that the geography of mining has changed significantly in the last six months. One of the reasons is China's crackdown on cryptocurrencies. More than half of the world's bitcoin miners went offline within a few days due to this action. Mike Collier, CEO of digital currency company Foundry, told CNBC that, 'This will force miners to look for alternatives that are renewable.' That is, those that can be renewed.
Many energy efficient options available
Talking about alternatives, there are many cryptocurrencies in the market that are not as popular as bitcoin, dodgecoin and ethereum but are energy efficient. According to a report by inquirer.net, Nano is one such cryptocurrency, which is said to have a very low energy footprint. This is because it is not mined like bitcoin. This is the reason that its carbon footprint is also low, which reduces transaction fees.
Similarly, Hedera Hashgraph is another no-mining cryptocurrency network that offers a low carbon footprint as well as low transaction fees. Another cryptocurrency is Cardano (ADA) which also works on an environment friendly model.
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