In a recent report, the US government raised concerns about the environmental effects of crypto technology. HearWhat ethical blockchain can do for you?
The Energy and Commerce House committee highlighted the rising trajectory of energy consumption due to the high demand for blockchains as the main issue.
This is after companies and investors flocked towards niche markets like cryptocurrency. Finance decentralization(DeFi), non-fungible tokens(NFTs), which are largely built on the Ethereum blockchain.
DeFi is a financial technology that allows users the freedom to conduct transactions without the need for a central intermediary. NFTs are digital assets that are unique and can be used to identify ownership and monetary value.
We will discuss the issue and outline the steps taken to make the blockchain sustainable.
Ethical Blockchain: Energy Consumption
Blockchains are very energy-intensive because it takes trillions of trials and errors to come up with the right nonce.
The computers also use additional energy to cool down and prevent overheating.
With millions upon millions of computers simultaneously producing energy, the University of Cambridge According to reports, Bitcoin emits 707 kilowatts per transaction and 121.36 Terawatt hours each year.
This estimate is higher than Argentina’s energy consumption and more than that of Google, Apple and Facebook combined.
One bitcoin transaction could provide enough energy to power an average home for two months.
These figures will only skyrocket with the unstoppable rise in blockchain technology in the next few years.
DeFi was introduced in 2017 but already has a total sales value of $97 billion.
On the other side, NFTsIn 2021, it grew to $85 Billion. Bitcoin, the most popular crypto at present, has increased its energy consumption by almost 62 percent in six years.
Source:| Source: TradingView.com
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The Role Of Renewable Energy
The first step in a green future, led by blockchain systems, is to switch to renewable energies.
A report shows that around 39% proof-of work crypto mining is done with renewable energy at the moment.
Although this may require more financial resources, the environmental benefits are well worth it.
Many start-ups have been advocating ethical blockchain and other related endeavors.
LiquidStack, a Hong Kong company, intends to decrease the temperature on mining rigs. Genesis Mining in Iceland has completely switched to renewable energy resources.
Turning to Proof of Stake Systems
Companies are also looking for pRoof-of work systems are proof-of stake systems that require less energy to solve complex problems.
Simon Peters, eToro’s cryptocurrency market analyst, explains how proof-of-stake mining requires a small amount cryptocurrency to be entered in a lottery to verify transactions.
In other words, the more money you have to put up as collateral, the less likely your transactions are to be hacked or other unscrupulous activities.
Looking Into The Future
While there is no perfect solution, blockchain analysts are hopeful that the future of the market will eventually become environment-friendly.
A long-term predictionIt could allow for the automation of many transactions from physical payment systems to transportation services and other technological innovations.
One thing is certain now: miners and users are becoming more conscious of blockchain and are coming up with new ways to make it ethical, sustainable, and green.
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