File photo. Photograph:( Reuters )
Elon Musk’s Tesla recently stopped the new payment method as he feared crypto mining was negatively affecting the environment
Everyone has heard the latest buzz around cryptocurrency and bitcoin. People have seen prices skyrocket and plunge down to a painful low with the help of Elon Musk’s one tweet or China’s ban on bitcoin mining.
Cryptocurrency is a digital currency that is secured using cryptography and is based on a decentralised network that needs to be mined. This is known as crypto mining.
It is the process of validating transactions of cryptocurrencies digitally, and the records of these are saved in form of blockchains, in which each and every transaction has a separate link to a subsequent transaction, which creates a chain of records.
Mining a bitcoin is a difficult and complex process in which experts solve complicated cryptographic equations with the help of high-tech computer systems to gain cryptocurrencies.
Recently, Elon Musk’s Tesla had started accepting bitcoins as a valid method of payment for products but Musk soon took a U-turn and stopped the new payment method as he feared crypto mining was negatively affecting the environment.
This raises the question that how does crypto mining, which is a code-based process, affect the environment.
The software that mines bitcoin takes nearly 10 minutes for the network participants to unriddle the complex program and process a block. This process consumes a large chunk of electricity to generate every single bitcoin and the major part of the energy is consumed during the mining process.
Crypto mining often relies on electricity which is generated from fossil fuels. As a result of that, as the prices of bitcoin rise, there is a stark increase in energy consumption too. The increasing price of bitcoin motivates miners to mine more bitcoins, which attracts more people to join the new network, and the energy consumption keeps on alarmingly increasing.
A study by the University of Cambridge suggested that crypto mining consumes more than 120 Terawatt Hours (Twh) per year, and this could be one of the top contenders in the list of top 10 energy consumers around the globe if it was a country.
The situation has reached the level where companies are scouting for areas with cheaper electricity to make the crypto mining process tad cheaper and easier.
A few studies have also claimed that crypto mining could also produce enough carbon dioxide to push global warming to more than 2 °C.
While the disadvantages of crypto mining are as clear as the day, several groups are trying to come up with ideas to make cryptocurrencies more sustainable. A supporter of cryptocurrency and owner of Tesla and SpaceX, Elon Musk has also vowed to shift back to cryptocurrencies once they find a bitcoin that uses less than one per cent of the current energy.