April 26, 2022
Cryptocurrencies have been around for quite a while, and the popularity of digital currencies continues to grow at a rapid pace. But, while they quickly become a symbol of money, they also have a negative impact on our environment.
In order to validate new transactions before they are included in the permanent record, computers compete across the system to solve mathematical puzzles. This process, known as proof-of-work, allows participating computers known as miners to earn a reward in Bitcoin for their actions.
In the beginning, the process used less electricity. However, as more people participated in the process, crypto mining became an industrial activity that consumed a large amount of energy.
The Cambridge Bitcoin Electricity Index estimates that Bitcoin alone consumes 142.84 terawatts of electricity a year.
Proof-of-work is a dangerous way to extract bitcoin because it produces a large amount of fossil fuels, which in turn has a negative impact on the climate and the environment.
Miners are exploring other ways to mine cryptocurrencies, including proof-of-stake.
So, instead of requiring people to solve complex mathematical puzzles, as proof-of-work does, proof-of-stake requires people to use their own currency as a bet and then randomly select it to confirm transactions, which is how they earn more currency.
The sources for this piece include an article in NPR.
