As the world becomes increasingly digitized, the importance of digital currency is only expected to grow. Bitcoin, the first and most well-known cryptocurrency, was created in 2009 as a response to the global financial crisis. The idea was to create a decentralized, secure form of currency that could be used by anyone, anywhere in the world.
While traditional fiat currencies are regulated by central banks, Bitcoin is not. Instead, it is a decentralized peer-to-peer system powered by blockchain technology.
Since its inception, Bitcoin has grown in popularity and usage. While it is not yet widely accepted as a form of payment, there are a growing number of businesses and individuals that are beginning to accept it.
As its usage increases, so does its environmental impact.
Bitcoin mining is the process by which new bitcoins are created. Miners use powerful computers to solve complex mathematical problems in order to verify transactions on the blockchain. In return for their work, they are rewarded with bitcoins.
The more miners there are in the network, the more secure it is. However, this also means that the energy consumption of the Bitcoin network is constantly increasing.
In 2017 alone, it is estimated that Bitcoin mining used up about as much electricity as the country of Denmark. If Bitcoin were a country, it would rank 61st in the world in terms of energy consumption! The majority of this energy comes from fossil fuels such as coal and natural gas.
This means that Bitcoin mining currently has a large carbon footprint.
As awareness of the environmental impact of Bitcoin grows, there are a few proposed solutions. One is to make mining more efficient by using cleaner energy sources such as solar or wind power. Another is to move away from proof-of-work (PoW) consensus and towards proof-of-stake (PoS).
With PoS, miners are not rewarded for solving mathematical problems but for holding coins in their wallets. This would greatly reduce the amount of energy needed to power the Bitcoin network.
Ultimately, whether or not Bitcoin is eco-friendly depends on how it is used and what kind of consensus algorithm is used to power it. If more miners move to cleaner energy sources and PoS is adopted by the majority of users, then Bitcoin could become much more eco-friendly in the future.