Bitcoin recently turned ten. At that time, it ignored the need for modern financial institutions to validate payments because it proved its revolutionary aspect. Instead, bitcoin relies on cryptographic techniques to prove identity and authenticity. However, the price to be paid for all of this innovation is a high carbon footprint created by Bitcoin mining.
What is Bitcoin mining?
The basis of this mining process is a peer-to-peer computer network that performs proof of work, known as validity providers. In essence, this includes computers that solve computational-intensive cryptographic puzzles that prove transaction blocks stored in a public book known as a Blockchain. This notebook is visible to everyone on all computers, which helps the system reach an agreement on an untrusted attendee network.
Validators are called miners because computer or node is awarded with Bitcoin, the miner who successfully approves one of these blocks. Thus, mining is the process of adding new money to bitcoin’s network. However, these processes consume a huge amount of power.
Increase in energy consumption
An article published in 2016 states that Bitcoin mining consumes 3.38 TeraWatt per year (TWh). The latest estimates show that the annual consumption of the currency is growing exponentially and is now reaching an incredible 55twhh value.
In a new article on sustainability in nature, Krypto shows that the energy costs of money mining exceed the cost of mining. Moreover, it is estimated that bitcoin spreads between 3m and 13m metric tons of CO2 in the first half of 2018. Even a team in Hawaii thinks that such emissions could cause global warming in a few years if Bitcoin’s adoption efforts continue to increase.
However, both in nature and Hawaii, the team makes assumptions about power generation tools. The hope is that such a change will take place for large-scale renewable energy, thus overriding the assumptions made in these articles.
Bitcoin’s proof of work algorithm proved to be effective
However, bitcoin’s concerns about energy consumption continue, so another crypto currency, Ethereum, is investigating a more energy efficient consensus known as Proof of cake. This method is different from proof of work because miners use their economic share to prove their operation in this network and therefore do not make energy-intensive calculations.
This brings in some complications, and at least it allows people on this network to be honest. Ethereum’s proposed solution is to impose sanctions on two versions of blockchain simultaneously, such as the punishment of miners for the production of blocks. After all, only one of these blocks is valid. Bitcoin’s proof of work takes on such problems implicitly because it involves natural punishments because miners have to spend energy to prove their operations.
In economic game theory, when a system is balanced, the Nash equilibrium is said to have been reached. Because no one can win by changing one of the strategies that produce a stable situation. The bitcoin Awards are awarded to miners, but when blocks help build the current Bitcoin blockchain, the most profitable outcome or Nash balance is given to each miner to act in consensus with the majority. As a result, despite excessive energy consumption, Bitcoin’s proof of work algorithm has been proven to be effective.
Is it a price worth paying?
In essence, this article looks at whether the blockchains are a refuter for the hierarchies of capitalism. If bitcoin supports an organization that is not based on capitalist consumption, can it indirectly reduce the energy use of society and help reduce its environmental impact? After all, consider the latest worrisome WWF report blamed all capitalism. That’s why we need alternatives.
Perhaps then, does the revolutionary offer of Bitcoin mean that the use of energy as an alternative to capitalism is worth paying? Since bitcoin mining is not the primary driving force behind climate change, this argument bears some weight if it reduces consumption in other areas of society. However, even then, given the urgency of environmental degradation, if we continue to generate energy that will generate too much heat CO2, this argument may provide insufficient solace.
Perhaps alternative consensus programs like the Proof of stack of the Ethereum provide some part of the solution. However, whether bitcoin or not, if Man is to avoid climate disaster, we must take immediate action and find solutions that produce clean, sustainable energy. If we do this, humanity will benefit and Bitcoin will always be among us as a byproduct.