One of the inherent problems with bitcoin and most cryptocurrencies is that they require an inordinate amount of power. Crypto operations consume a lot of electricity simply to mint and distribute the currencies, and that’s before including the energy used to mine or acquire them through the blockchain.
One bitcoin specialist estimates that the global power consumption to power bitcoin’s software is 2.55 gigawatts, or 22 terawatt-hours per year. For comparison, that’s about the same amount of electricity used throughout the whole of Ireland. One researcher has even claimed bitcoin is killing the planet, with its completely unsustainable use of power.
That’s just bitcoin alone. Already, there are dozens — if not hundreds — of alternate cryptocurrencies that require similar levels of electricity to operate. Alternatives include Ripple, Litecoin, Ethereum, Monero, Dogecoin and more.
Cryptocurrencies, as well as the blockchain, all rely on massive amounts of electricity, eliminating any benefits earned while using them. It’s a shame, considering blockchain technology has a lot of potential in other areas, even in sustainability. There are talks about using the technology to openly distribute power.
After considering the technology’s impact on power and electricity consumption, one question looms: How can we make these platforms more sustainable?
In addition, is there a way to improve their consumption levels, if only to cut down on the total amount of electricity these technologies are using?
Decreasing Blockchain Energy Consumption
Unfortunately, the nature of blockchain and cryptocurrencies like bitcoin call for increased power and resource usage. This is due to a concept called proof-of-work, or PoW, which is used to describe the type of network bitcoin uses to add and validate transactions to the blockchain.
Proof-of-work values computing power and heavy resource usage, because it leads to higher validation or simply more currency acquisition. Basically, mining for cryptocurrencies calls for the system to solve complex mathematical challenges or equations.
When several machines are used together to do the work, it’s called a pool. Collectively, the network works to solve these equations and discover or unlock new coins.
When bitcoin was first introduced, it took a lot less power to solve the challenges. Today, it’s nearly impossible to do the work with a small, consumer-grade machine.
Of course, more powerful and complex equipment means more power and higher levels of consumption. As time goes on, that resource usage will only increase as more energy is necessary to validate and mine.
A Promising Solution
One of the solutions is to swap that validation system to something called proof-of-stake, or PoS. It was originally engineered as an alternative to PoW and was specifically developed to consume fewer resources, namely less energy.
With this method, coins are no longer mined but instead are forged or minted similar to traditional currency. Block validation is handled by designated systems or handlers called validators.
Each one is chosen depending on the amount of stake they hold with a specific blockchain network, and the more stake, the higher the chance of becoming a validator. Most of these coins see an initial public offering or IPO, but it’s not always done this way.
Some examples of currencies that use proof-of-stake validation include Dash, NEO, NavCoin, Zcoin, Stratis and more.
Proof-of-authority is another validation method that calls for a select group of people — around 25 total — to validate transactions directly. They are viewed as trustworthy, akin to administrators, and are often chosen according to a blockchain-wide consensus.
It’s less common and primarily used for private blockchains, many of which are not associated with cryptocurrencies directly. A small blockchain designed for energy distribution, for example, might use this validation method.
Changing the Mining and Validation Process
At this point, there isn’t much else that can be done to reduce the energy consumption of blockchain and cryptocurrency projects other than changing the mining and validation methods used. Switching from a proof-of-work system to proof-of-stake is the first step.
Cryptocurrency miners and blockchain users, on the other hand, can ensure they are honoring more sustainable practices when it comes to energy usage. Swapping from traditional power sources to renewable energy can help considerably.
Time will tell if the community can right this sinking ship. If nothing is done, energy consumption will continue to grow — and that could prove disastrous in many ways.