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Can Bitcoin use less energy?

By Guardian Nigeria
13 August 2022   |   9:36 pm
Do you think that Bitcoin can use less energy? Here is how this electronic currency can use less energy. Satoshi Nakamoto created Bitcoin to enable quick and borderless transactions because the traditional banking system took too long to complete transactions. Since then, Bitcoin has revolutionized the financial system and attracted many investors who believe that…

Do you think that Bitcoin can use less energy? Here is how this electronic currency can use less energy.

Satoshi Nakamoto created Bitcoin to enable quick and borderless transactions because the traditional banking system took too long to complete transactions.

Since then, Bitcoin has revolutionized the financial system and attracted many investors who believe that they will make huge returns from investing in this digital currency via platforms like bitcodes-ai.com

On the contrary, mining this digital currency consumes much electricity when computed yearly at 128 terawatt-hours. This virtual currency uses 706 kilowatts of electricity for every transaction, which is higher than Ethereum. 

To validate transactions that people conduct with this electronic currency, Bitcoin requires computers to solve complex math problems. As a result, this virtual asset’s proof of work mechanism consumes a lot of energy. Here is what Bitcoin advocates suggest so that this digital currency can use less energy.

Implement the Proof-of-Stake Systems

The proof of stake mechanism does not need similar resources as the proof of work system because it uses very few resources. In other words, the proof-of-stake system expects players to contribute a small amount of their electronic currency. 

As a result, the proof of stake mechanism eliminates the competitive computational element, saving energy and allowing each machine in the network to solve one problem simultaneously compared to a proof of work system where computers are rushing to solve the exact problems. 

Ethereum, the second-largest and most popular cryptocurrency, implements the proof-of-stake system from the proof-of-work scheme. As a result, it will lower Ethereum’s energy consumption. So, implementing the proof-of-stake system would make Bitcoin consume less energy.

Adopt Pre-Mining

Pre-mining is a scheme that works similarly to stocks and conventional currencies, and some cryptocurrencies have embraced pre-mining. During pre-mining, a regulatory authority comes up with a certain amount of an item and then dismisses the amount into the economy regarding daily activities in the world or jobs. 

However, transitioning this digital currency to a proof of stake or pre-mined system is not a simple task because it will alter the Bitcoin protocol. To modify the Bitcoin system successfully, they will have to persuade many miners and stakeholders to agree to the new changes, which is a tough decision. 

Introduce Carbon Fees

Carbon fees indicate the ability of the government to allow a company to secrete a certain amount of carbon emission into the new environment. Most times, carbon fees have security which means that organizations that do not have to emit a lot of emissions compared to other firms can trade this digital currency.  

With the availability of a Bitcoin mining organization, the company will buy carbon credits from another firm to clean the emissions it creates. The firm can earn extended returns from selling its credits after switching to greener energy. So, if Bitcoin introduces carbon fees, that would translate to low energy consumption.

Adopt Renewable Energy

Mining of this digital currency that was using renewable energy dropped when china banned the mining of this digital money. As a result, there was decreased mining in the country.

As a result of China banning the mining of this virtual currency, the share of renewable energy powering Bitcoin mining dropped significantly. 

The Bottom Line

Even though Bitcoin mining is a high energy-consuming process, implementing the above ideas would result in Bitcoin using less energy. This digital money does not stand out significantly among cryptocurrencies as per its environmental limitations. That’s why some environmentalists are against Bitcoin and other cryptocurrencies. However, crypto experts and enthusiasts believe Bitcoin could eventually use different energy sources. Using solar power is the most touted way to minimize the carbon footprint from Bitcoin mining.