Akihabara News (Tokyo) – Soaring temperatures this summer in Texas forced cryptocurrency mining operations to cease activity, and in the process reigniting the debate on the verifiability of the technological environment. Still, steps are being taken to develop a more carbon-aware blockchain infrastructure.
The relatively cheap energy in Texas has attracted crypto miners to set up operations in the US state, which has put a strain on the capacity of the power grid. These operations in Texas are predicted to require 6GW of electricity by 2023, which is roughly equivalent to the needs of the country’s largest city, Houston.
However, in the past week, the majority of industrial mining enterprises have been temporarily closed in line with the demands of the Texas grid authorities that private companies conserve energy.
Cryptocurrency mining is how new coins are effectively “minted.” This is achieved by setting the computer to solve complex mathematical puzzles in order to generate new coins. As the blocks increase, this process requires more complex calculations to solve—thus increasing the computing power and energy required.
This “Proof of Work” (PoW) system, which creates coins only if a significant amount of activity is detected from mining computers, is a critical factor in cryptocurrency’s massive power consumption.
As shown by the shutdown in Texas, the carbon footprint of cryptocurrency mining is a significant weakness in the emerging technology ecosystem. Bitcoin, the first cryptocurrency and still the most valuable, uses about 115 terawatt hours of global energy every year, thus emitting about 65 million tons of carbon dioxide on an annual basis.
Critics have argued that such huge energy requirements put cryptocurrency out of step with other emerging technologies at a time of climate crisis.
Supporters of cryptocurrency argue for patience, stressing that the technology is still in the early stages of development and will make improvements over time.
This position is shared by the World Economic Forum (WEF), which has established partnerships with dozens of cryptocurrency organizations around the world. The WEF suggests that blockchain technology will be an important innovation in the fight against climate change.
In particular, the use of cryptocurrencies can accelerate costly inefficiencies in global trade and energy management. The WEF also introduced the Carbon Utility Token (CUT), a cryptocurrency that can be purchased by companies whose entire proceeds from trade go to green investments. The more CUTs a company holds, the higher its Environmental, Social, and Corporate Governance (ESG) investment rating will be.
Work has been done to decarbonize the cryptocurrency infrastructure with developments like Ethereum 2.0. This network, second only to Bitcoin, uses a new “Proof of Stake” (PoS) system that will be 99% more energy efficient than the established PoW model.
Many smaller blockchain projects, such as SolarCoin and Cardano, have been set up as carbon neutral operations. For example, SolarCoins can only be verified on the blockchain if the mining process is powered by solar energy.
Latest FinTech Related Articles
PayPal Snaps Up Japan’s FinTech Unicorn
XELS Marries Blockchain with Carbon Reduction
