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Non-renewable energy resources can be exhausted if the use of cryptocurrencies is continued
Since the launch of the first cryptocurrency in 2009 by Satoshi Nakamoto, digital currencies have come so far. After Bitcoin, many altcoins have come into the picture and managed to succeed in the market. As of now, there are more than 5000 cryptos listed on the coinmarketcap. The first cryptocurrency was created with the aim of helping people control their money without relying on banks and governments. Since then, these digital currencies have got a crucial role to play; they improve the world's banking system, act as a medium of exchange, and many more.
In a nutshell, cryptocurrencies are a way for people to upgrade themselves. According to the reports, one-third of the world population is relying upon digital assets. Indeed they are a method to boost our lifestyles because they provide security to the asset, absolute transparency to the transactions, and prevent hacking.
The value of financial institutions is increased drastically due to cryptocurrencies. In a rush to the development, are we neglecting something? Well, we might be overlooking the environmental implications of these currencies. To know their effect on the environment becomes even essential when many businesses today have pledged to invest in sustainable business models.
Cryptocurrencies require a massive amount of energy for the activity of mining. Let us try to understand how exactly it involves the use of energy for mining. In mining, the miners verify the previous transactions on the blockchain to ensure that the blockchains are permanent, immutable ledgers and enable the new transaction. They get the reward in the form of cryptocurrencies when they verify a new block. Notably, verification is a competitive process where the miners compete to solve complex problems. This, in turn, requires the use of computing power, and hence, electricity is needed.
The more the number of competing miners, the more will be the use of electricity (or energy). Mining is a way to keep running the blockchains by incentivizing the participants, but it also consumes a lot of energy. It is noted that Bitcoin alone has reached a hashrate of 144.43M TH/s as of May 22, 2021. It was 94.61 M TH/s in the previous year, and the hashrate is increased by more than 52% within a year. Notably, Hashrate is precisely the mining speed or the computational power used per second.
For ETH, the hashrate as of May 22, 2021, is 621.79 TH/s. It has increased by almost 248% since a year. Keeping the data in mind, it can be said that the use of computational is growing exponentially day by day, and so is the energy consumption. If we continue to consume non-renewable sources of energy, it will not take much time to get completely exhausted. So, it becomes pretty important to look for energy sustainability along with considering the benefits of the cryptos.
So, what is the solution? Should we start thinking that cryptocurrencies are bad? Of course not; cryptos are pretty impactful in the development of an individual and the whole country. The solution is that we should start focusing on alternate energy sources for the mining process instead of coal. This source could be the use of hydroelectric power or natural gasses like methane. It's not like it is something new concept to introduce. Miners in many regions of China are already making use of hydroelectric power. But, we should focus on this on a large scale.