- The Ethereum merge has left Bitcoin as the only major cryptocurrency still utilizing PoW.
- The move has heightened the push for sustainability measures within Bitcoin's network.
The Ethereum merge, one of the most iconic crypto events of 2022, was a pivotal moment that signified a major shift in the crypto landscape. With it, the second largest cryptocurrency switched to proof-of-stake (PoS) consensus from the energy-intensive and much-maligned proof-of-work (PoW) consensus. This move would drastically decrease ETH's energy consumption by 99%, leaving Bitcoin (BTC) as the only major cryptocurrency still utilizing PoW.
As evidenced by CryptoMonday.de's analysis, this transition has drastically impacted Bitcoin's proportion of global crypto asset electricity usage. The site reports that BTC's share of worldwide cryptocurrency electricity usage has risen dramatically – from an average of 68.5% before the merge to 97% after. As a result, critics are becoming increasingly vocal about pushing for sustainability measures within its network structure.
CryptoMonday CEO Jonathan Merry recently shared his thoughts on Bitcoin's outsized electricity footprint. He explained:
Bitcoin, the biggest player in the crypto market, has been growing its proportion of global crypto asset electricity demand raising some serious concerns. With Bitcoin mining gobbling such a massive amount of electricity, we need to start finding ways to make it more resource efficient and sustainable.CryptoMonday CEO, Jonathan Merry
Bitcoin mining and Renewable Energy Investments
The PoW consensus requires miners to solve complicated mathematical problems to receive block rewards for processing transactions. This method is incredibly taxing on resources and extremely energy intensive. Many BTC opponents believe this is one of the primary factors contributing to Bitcoin’s high carbon footprint.
However, some argue that this criticism is overly harsh and fails to consider Bitcoin's potential positive environmental impact. Merry is among BTC proponents who argue that its miners already embrace green energy in their activities. He insists that Bitcoin mining creates economic demand for energy incentivizing greater investments in renewable sources.
As Bitcoin mining is an energy-guzzling undertaking, its cost can be significant. So to make a profit, miners must carefully balance their mining costs with their block rewards. One way to reduce mining costs is to invest in renewable energy sources like solar or wind power. These are typically much cheaper and more environmentally friendly than traditional fossil fuels, such as coal or natural gas.
By investing in renewable energy, miners can reduce operating costs and improve profit margins. This, in turn, incentivizes them to invest in more renewable energy.
What Next for Bitcoin?
As far as solutions go for Bitcoin, many proponents have suggested different approaches toward making BTC mining more sustainable. Some have proposed switching to other algorithms like Proof-of Activity (PoA), which consumes less energy than traditional PoW schemes. Others suggest installing ASIC-resistant algorithms, making mining with specialized equipment difficult, if not impossible.
While there have been some calls for changing Bitcoin’s consensus algorithm away from PoW towards something like PoS or delegated Proof-of-Stake (dPoS), these movements have been slow-moving and met with resistance from some core developers within the community who fear that such a change could threaten decentralization if not implemented correctly.
It remains to be seen whether or not Bitcoin will ever make the jump from PoW algorithms. But it is an attractive option given its potential environmental benefits and cost-effectiveness compared with traditional PoW-based models of verifying transactions. That said, such a move would require major policy shifts within the BTC ecosystem.
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