Blockchain technology has the potential to be used in countless ways that will benefit society. However, the way it has been used by bitcoin, the way it was originally created, is not good for the environment. Bitcoin and many other cryptos use proof-of-work (PoW) to mine coins, which involves computers solving complex mathematical questions to create a coin.
Each transaction takes a very high amount of energy, with Forex suggesting each transaction uses 707kWh, while UN News suggests the figure is just under 1000kWh. Either way, PoW mining uses an exorbitant amount of energy, compared to the 0.0006kWh used in Mastercard transactions.
So as crypto continues to grow in popularity, what is being done to ensure eco-friendliness? StarLaunch CEO Aatash Amir says, “The simplest answer is not enough. PoW is still a major issue in blockchain technology, and several projects have demonstrated that it is not a viable or necessary step. The real solution lies with the source of the power consumption as a whole. Financial technologies will advance regardless of the source of electricity. Ideally, the most energy-efficient chains would grow, but we would still need to invest in nuclear power and other non-CO2 emitting sources of energy.”
Aatash Amir suggests that one solution may be to introduce regulation. “Although regulation in blockchain is a controversial term, the easiest way would be to have a positive response through offering tax incentives to chains and companies that use zero-carbon emission sources of energy.”