One of the biggest concerns surrounding cryptocurrencies is the nasty effect they can have on our planet. Fossil fuels have been the main source of electricity for years, and they are essential to our life on earth. However, in recent years, the global climate change moment is beginning to get traction. Cryptocurrencies have been contributing to this, indirectly. Due to the lack of inefficiencies in the electrical grid, some of the energy we produced ends up being wasted. This creates a problem that cryptocurrency mining can solve. Crypto miners are able to use this excess energy to power their mining rigs.
This allows them to increase the efficiency of using energy that would otherwise be wasted entirely. For now, the systems in place are still rudimentary, but they will continue to improve. Cryptomining can actually help solve the problem of energy waste, which has been so detrimental to the planet.
Climate concerns over Cryptocurrencies
We all remember Elon Musk’s tweet about the negative impact bitcoin has in the environment. If you don’t remember or you haven’t seen it here it is:
It is important to add some perspective to this. Remember that not every cryptocurrency is the same. Therefore not all of them consume the same amount of energy. For that reason, some crypto experts advocate that over the long term those cryptocurrencies with a more efficient cost per transaction will be the most used. This seems to be a very accurate assessment of what we can expect going forward. Although we are still far from it, it will be an important trend in the crypto space going forward.
Estimated CO2 emissions
Let’s start by saying that it is nearly impossible to accurately estimate the CO2 emissions of bitcoin transactions. This is because there is not sufficient data to calculate the exact amount of CO2 emissions every bitcoin transaction creates. Every transaction is powered in a different way. The energy behind this transaction is different depending on the miner. Some can use fossil fuels, for cost efficiency and some actually use renewables. However, we can try to estimate how much bitcoin affects CO2 emissions worldwide. According to Digieconomist, Bitcoin’s CO2 emissions are the equivalent of Romania’s. A country that has 19.29 million inhabitants.
This is what led Tesla CEO Elon Musk to raise the issue publicly on Twitter. Despite that, some crypto naysayers are overlooking the extremely efficient crypto alternatives out there.
Energy-efficient crypto is the new trend
Following the publicly discussed case of bitcoin, many experts are now advocates of energy-efficient cryptocurrencies. These cryptos have similar features and come with a great advantage – efficiency. Over the years, thousands upon thousands of different cryptocurrencies were created. To suit different purposes, and to be implemented in different ways. Recently more and more cryptocurrencies have been created to address the problem of inefficiency and its impact on the planet. Here is one of the most well-known cryptocurrencies that are extremely efficient.
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Hedera Hashgraph (HBAR)
This is certainly one of the most exciting cryptocurrencies created over the last few years. Not only is it extremely efficient but it is also backed by some very well-known entities. Hedera has its own governing council. This counsel includes very large corporations to back it up. Google, Boeing, Deutsche Telekom, and LG are all involved in Hedera and give more confidence to crypto investors to consider it as a good alternative to Bitcoin.
We have to put things in perspective. When Bitcoin was initially developed its main purpose was not to be energy efficient. It was to be a decentralized means of exchange. As time goes crypto will become increasingly more demanding towards features and capabilities of different cryptocurrencies. Hedra might be one of the solutions to increase the energy efficiency of crypto transactions. The fact that it is backed by large corporations who are interested in seeing Hedra succeed is a great advantage.
Just like a product or service that has the first-mover advantage in a market it needs to be updated and constantly reviewed to be improved. This is the same with cryptocurrencies. Over the next years, we will see an increase not only in the climate and efficiency concerns of cryptos but also in its transaction costs. Ultimately some cryptocurrencies will never cease to exist. Bitcoin for instance will always play an important role in this space. However, newer more efficient alternatives will appeal to crypto investors.
We shall see over time the increase in new concerns surrounding cryptocurrencies that will lead to the development of new alternatives. The crypto industry is still in its infancy, and it is always important to remember that when we try to make long-term projections. Just like any industry, in the beginning, things look scattered. Over time convergence will dominate crypto, and the move to renewable energy sources show just that.