Are there any sustainable alternatives to Bitcoin mining?
Bitcoin mining has become a prominent part of the industry, powering up profitability, productivity, and adoption. The underlying cryptocurrency gained traction soon after its delivery on the market, gaining investors’ trust due to enhanced safety measures and opportunities to boost their investments.
Bitcoin is close to adoption, as the SEC categorized it as a commodity under the U.S. Commodity Exchange Act (CEA). Bitcoin passed the Howey test, which includes strict criteria for determining the category of a financial instrument.
In addition, Bitcoin technology has evolved considerably in the past years, making it easy for investors to acquire and use it as a store of value. You can now buy Bitcoin with credit card, or even Google Play and Apple Play, so it’s now integrated with our traditional financial system.
However, intensive mining is required for Bitcoin to be safe and easy to acquire, which currently lacks sustainability. States like Texas contribute heavily to Bitcoin mining, but locals fear the facilities will interfere with the electrical grid, among other concerns. So, can Bitcoin mining turn to sustainability?
What are the main problems with Bitcoin mining?
Mining Bitcoin requires miners worldwide to use a lot of electricity for the energy-intensive grids to function and successfully mine blocks. The systems work on the proof-of-work consensus mechanism, whose technology is slowly becoming obsolete in light of other alternatives, like proof-of-stake.
The impact of mining Bitcoin at a global level leads to the creation of carbon emissions due to using fossil fuels. The electronic waste is considerable considering that mining is now done through farms, allowing miners to contribute and benefit according to their possibilities.
Moreover, noise pollution is prominent across mining rigs. In Texas, many people reported hearing loss risks and other symptoms due to the noise of Bitcoin mines around their neighborhoods.
So, are there any alternatives?
Yes, there are numerous alternatives for Bitcoin mining. Ethereum, for example, started with the exact consensus mechanism but soon switched to proof-of-stake, introducing staking to keep the network safe and productive. This makes the blockchain one of the most sustainable solutions on the market.
Therefore, Bitcoin would have a great opportunity to change its consensus mechanism, as there are many others, including proof-of-authority, Byzantine Fault Tolerance, or proof-of-capacity. However, this change requires an intensive effort from developers, nodes, and miners.
Renewable energy for mining
Since Bitcoin mining currently uses fossil fuels and other similar energy resources, its consumption and environmental effects can intensify in the future. However, this can change if more renewable energy solutions become accessible to miners and mining facilities.
Some of these solutions include:
- Wind energy can reduce greenhouse gas emissions in mining grids;
- Solar energy is great for low costs and less water pollution;
Of course, there’s more to it. Biodiesel, geothermal energy, and hydropower can also be efficient, but they’ve been scarcely studied or considered for Bitcoin mining. That doesn’t mean they don’t have the potential to contribute in the future.
However, regulation is still on its way
One of the biggest challenges of cryptocurrency and blockchain is the lack of regulation. While countries initially undermined these assets and their opportunities for the future, their approach now is based on fear and uncertainty due to their newness.
While Bitcoin is close to regulation, plenty of other cryptocurrencies are waiting for a proper introduction to the real world. In addition, blockchain is still waiting for a proper legal framework, although it has been shown that it could bring great benefits to companies and governments.
Indeed, the main challenge in this industry is the lack of personnel with ample knowledge of both crypto and blockchain. Since mastering them would require intensive studying and countless hours of experimenting, there is less awareness of the subject than there ideally should be. Therefore, there is a slow integration process.
There’s also an ethical implication to mining
The ethical problem with Bitcoin mining lies in how it’s seen as a business. Many mining grids are placed in countries with low energy prices, so miners can benefit from the best rates. For example, Iran is known as the profitability land, where the cost of one Bitcoin is significantly lower than mining in the U.S.
Some countries, such as Kosovo or Angola, banned all crypto mining due to concerns about an energy crisis. Indeed, massive grids of crypto mining placed within communities can substantially increase energy prices, affecting the locals and the economy.
Therefore, the legal framework of crypto mining should include details of rig placements. Countries should also consider the ups and downs of accepting mining companies within their areas, but most importantly, they should consider the citizens and their needs, especially when we’re talking about developing countries.
Why should Bitcoin be sustainable?
While sustainability seems more like a trend now, it’s imperative for its success to happen as fast as possible, considering the harmful effects of climate change on the planet. Bitcoin mining is the only contribution to this effect, and since it’s digital money, it should have the opposite effect.
Satoshi Nakamoto created Bitcoin to offer communities the opportunity to access money without the endless process banks require. Many people are left unbanked across the world, and they’ve started using Bitcoin with few resources to save up for the future.
Bitcoin should be sustainable because it’s part of the Web3 future, in which decentralized systems take the place of bureaucracy, and every unsustainable task can become digitalized. Therefore, the future should be easy for businesses and individuals.
What do you think about Bitcoin mining?
Mining is vital for Bitcoin to continue being safe and efficient for investors worldwide. However, it requires a lot of electric energy to be productive and profitable, which affects the environment due to electronic waste or noise pollution. Therefore, Bitcoin mining must tap into sustainable alternatives, such as using solar or wind power. Future possibilities might include biodiesel or geothermal energy resources. However, governments must focus on spreading awareness of the situation and provide minimum compliance with the legal framework needed to function.
