Since crypto assets first entered the mainstream financial conversation, there has been debate about how much power and energy will be consumed by crypto trading. The statistics and anecdotes used include the reality that Bitcoin consumes more power than some countries, and Bitcoin mining is equivalent to adding a whole new city to a particular power grid. increase. Cryptographic mining absolutely consumes a fair amount of power and energy, but it misses a wider and more important point.
All large industries, including today’s financial services and numerous streaming content providers that are very much enjoyed around the world, are also consuming large amounts of electricity for decades. This is not presented as an excuse or to persuade industries that are very different from each other. Rather, power consumption and usage emphasize the simple reality of the fact that every industry must be able to justify. In other words, you need to answer the question. Is the power consumed and used by crypto assets worth it?
This opens the door to more comprehensive questions to address. As the energy conversation around cryptocurrencies continues to evolve, what are the energy issues that investors and policy makers should keep in mind?
Cryptography can drive green innovation. Probably starting from the most influential point, the increased use and integration of crypto assets throughout the economy has led to the understanding that crypto assets can help drive green energy innovation. This is consistent with the focus on renewable and green energy resources such as solar, wind and hydro, but that’s not the only conversation.
Cryptocurrency miners and operators are actively working with energy producers, as solutions related to green renewables are still in the pipeline and appear to be ready for mass market adoption. do Marketplace-based solution.. For example, there are many examples of cryptographic organizations working with oil and gas producers to utilize excess natural gas and other resources that would otherwise be wasted.
It may seem paradoxical at first, but the increase in power used in the crypto industry can actually pave the way for both more efficient and environmentally friendly solutions over time. there is.
The code is already green. One statistic that is often overlooked because it can be a very intense debate about the benefits of crypto assets is the reality that crypto mining and other activities are already leveraging green and renewable energy resources. .. Depending on the particular study referenced, the actual percentage of electricity coming from the green source is 25% -60%, But the message is the same. When viewed through this lens, crypto operators may actually be more environmentally friendly than standard.
According to a study published by US Energy Information Administration, On average, 12.1% of the energy consumed and 20.1% of the electricity produced comes from renewable energy sources.In other words, it can be verified by publicly available information, and cryptocurrency mining and operators can use more renewablely supplied energy than the average organization, at least in the United States.
Of course, the crypto market is a global market, so it’s difficult to extrapolate US trends to the global stage, but it’s encouraging to see how deeply this sector is embracing renewable energy sources.
Proof of stake is increasing. It is also important to remember that for all of the passionate conversations on the subject of crypto energy consumption, these comments (in most cases) only refer to the power used by Bitcoin miners. Bitcoin, as is commonly known, utilizes the Proof of Work (PoW) consensus protocol to validate blocks and maintain the integrity of existing blockchains. These discussions do not work under the Proof of Work Protocol and ignore an array of fast-growing and diverse products and services that utilize the Proof of Stake (PoS) consensus methodology.
Depending on the specific study referenced, the transition from PoW to PoS Reduces power consumption Up to 99% around certain blockchain and crypto products, this will obviously dramatically change the tone of current power-related conversations. Many of today’s crypto-asset applications (only two, decentralized finance and non-fungible tokens) are running on the Ethereum blockchain, and the Ethereum community is ready to move from PoW to PoS in this area. Can bring dramatic changes to.
Like everything connected to blockchains and crypto assets, the seemingly simple headlines that dominate the conversation can overlook the subtle layers that need to be analyzed. Blockchain and crypto assets consume quite a lot of energy. It’s beyond controversy. Where the conversation should be focused, and more and more, is 1) the rationale behind this power use, and 2) how this energy is supplied. Cryptography uses power, as is the case with all enterprises, and the value provided by cryptographic applications far exceeds the costs they incur.