How Does Crypto Impact the Environment?

When we think about crypto, many of us believe that crypto is all digital and that with crypto there are no impacts towards anything. Well we think wrong, ever since we have started crypto mining, nearly 38 kilotons of electronic waste is annually produced as a byproduct of Bitcoin mining. 

What makes crypto impact the environment?

There are a couple factors that come into play when we start to discuss where and how exactly crypto is affecting the environment, with the main one being crypto mining. Ever since crypto began, we realized that this new industry would take up alot of power, especially since it is powered all through electricity. The electricity consumption is consumed the most while mining for crypto. Proof-of-work cryptocurrency mining is designed to consume enormous quantities of energy. 

What is Proof of Work Crypto Mining?

Crypto mining is a process where you are tasked to solve a specific problem while racing to be the first one to complete a meaningless problem. Since your computer is the one computing and solving the problem, your computer starts to take up and consume loads of energy just to be able to complete a problem first. 

So over time, the electricity used by miners in these races increases exponentially. Depending on the consensus mechanism, crypto mining is worked differently. Though since we see a large amount of people mining bitcoin, and since bitcoin works off proof of work, we see larger amounts of energy getting wasted in something which isn’t efficient enough.

Why does crypto mining require energy?

 The way crypto mining is designed, expects you to understand that it uses large amounts of energy to solve problems which can take up to years for one as a human to find. The network depends on the computational power of thousands of mining machines to solve. This dependency is then shown to maintain the security of cryptocurrency blockchains that use proof-of-work consensus. 

How can we make crypto eco-friendly?

Now it comes down to the game winning question, how can we make crypto eco-friendly based. There are a couple of solutions to how crypto can be eco-friendly. The main and most effective way is by using more energy efficient consensus mechanisms. 

Currently we have noticed that Proof of Work consumes a lot of energy since it is not efficient at all, as it is just wasting energy and letting it flow down the drain. That is why switching and transitioning over to more efficient consensus mechanisms is the way to go. Some of these more efficient mechanisms include Proof of Stake, Proof of Burn, Proof of Capacity, and Proof of Elapsed Time. 

Proof of stake is known for its efficiency as it was designed to make mining more energy efficient. There are already more than 200 coins that operate through proof of stake, the largest of which is Solana, with a market cap of $28.39 billion. Though the only problem seen through the use of Proof of Stake is that it has been criticized for systemic inequities. But it is more efficient than proof of work since it doesn’t require the amount of expensive equipment proof of work does, which helps save and reduce the amount of e-waste, along with it consuming less amounts of energy.