Cryptocurrency News

Renewable Energy in Cryptocurrency Mining

You don’t have to search hard on the web before realizing that Bitcoin mining is known for wasting large sums of energy. When mining Bitcoin, a program needs to solve a highly complex problem. To create just one Bitcoin, a computer needs to run millions of simulations that take up an enormous amount of power. Bitcoin is infamous for wasting 40-million tons of carbon dioxide per year. Unfortunately, the volumes of power needed are a component of crypto trading. Fortunately, a growing number of Bitcoin miners are developing a green version of mining that will allow the creation of cryptocurrency without generating a large carbon footprint.

: Statista/Cambridge Centre for Alternative Finance
: Statista/Cambridge Centre for Alternative Finance

Trying to Use Untapped Resources

The issue with the electricity needed to generate Bitcoin comes when the miner uses electricity that a regular consumer would otherwise need. Suppose a miner is in a location with plenty of excess power. In that case, while the footprint is concerning, electricity use is not stolen from utilities who need to provide power to their customers. Some miners are going to areas in Texas where they have so much natural gas that it is flared in the air. To alter this situation, portable turbines are set up near the mining location, and natural gas is used to create the power needed to create a Bitcoin. This scenario is happening more in the United States, which has become the second-largest miner of Bitcoin globally with more than 17% share compared to just 4% two years ago. According to Cambridge University, the global network of Bitcoin miners uses between 8 and 15 gigawatts of power continuously per day. This use compares to a city like Manhattan that uses just 6 gigawatts of energy per day.

Trying to Generate Power from Alternatives

Several alternatives can be used to create electromagnetic energy. You can use natural gas, coal, petroleum, wind, water, and even organic waste and fats to run a turbine engine. There is now a concerted effort to use fats and refuse to create alternative energy sources that will help to generate enough electricity to mitigate the carbon footprint caused by mining Bitcoin.

An initial pretreatment process is used on fats and oils to create a product that can be used to make diesel. Renewable diesel can be used for air travel, bus and car travel, and electricity generation. An example of these organic compounds is used cooking oil (UCO). UCO is an oil product used to cook food items. Before the UCO is discarded, it is picked up and brought to a plant for pretreatment. The UCO is then blended with other chemicals to make a compound referred to as renewable diesel. Renewable diesel can be used to run a turbine which creates renewable electricity. The carbon footprint of renewable diesel is lower than using petroleum to run a turbine to produce power.

Why is There an Electricity Problem?

The power issues that stem from mining Bitcoin are based on a concept known as “proof of work.” This process is put in place to ensure that no party in the network spends the same Bitcoin multiple times. The proof-of-work process verifies transactions without the involvement of a third party. The network, a mining community, agrees that the transaction is valid. To ensure that a transaction is valid, computing power, known as a node, is used, and once the equation is solved, a new block on the blockchain is validated. The group or person that solves the mathematical puzzle the fastest will create a link between the previous block and the existing plant and generate a new Bitcoin. These proof-of-work algorithms determine who gets to amend the blockchain ledger, allowing other users to reject an altered blockchain version. While this is an extensive process, it is very energy-intensive.

An alternative to proof of work is called proof-of-stake. This mechanism is an alternative way to validate a transaction on a blockchain. Here a user needs to show they own a specific quantity of the cryptocurrency. The miner with the most significant stake would be allowed to generate the next block on the chain and reap the proof-of-work reward. In essence, the proof-of-stake process eliminates the need for mining and therefore is a greener form of creating a block on the chain. A user who wants to be included in the proof-of-stake process needs to put up a particular value of the cryptocurrency for the methodology to function.

The Bottom Line

The proof-of-stake process is still relatively new and gives better access to early developers.
The proof-of-stake network increases scale by establishing a consensus before blocks are constructed. On the other hand, proof-of-work provides more accessible assets but requires a significant amount of power to race for the answers to a computer puzzle. The upshot is that proof-of-work uses more power than proof-of-stake and needs other renewable energy sources such as wind, water, fats, and oils to make electricity it needs to function more carbon friendly.

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