What is a new cryptocurrency that makes “mining business” sustainable?

March 26, 2022

(IISIA Researcher’s Report Vol.2)

While usage of virtual currency is more widespread, a large amount of power consumption in a process called “mining” has been recognized as social issues. The system of cryptocurrencies does not have administrator like a central bank. Therefore, many third parties cooperate with the complicated calculation work required for transaction approval and confirmation. They can acquire a newly issued cryptocurrency as success fee through the process. This is called “mining”.

Since computer processing through “mining” is complicated, many computers are used. The process ends up being required an enormous amount of energy. Therefore, cryptocurrencies are said to be a major threat to the global environment and human being. While nobodies can say accurate data of electricity consumption through the process, there are various methods for estimation. If “mining” in Bitcoin is conducted by the most efficient computer processing, the expected power consumption is at least 13 terawatt hours, and it equals total Slovenian electricity usage. If you do not make such a conservative estimate, Bitcoin is likely to consume about twice as much energy as Slovenian; it is about 0.7 percent of the total US electricity usage.

Figure: Bitcoin Electricity Usage
(Source: University of Cambridge)

Therefore, it could be essential for “mining business” to consider power consumption in order to reduce their environmental impact and continue their business in every regions. While massive energy consumption causes a serious problem, what kind of virtual currency consumes less electricity? Bitcoin is the third most traded currency in the world by market value, but its mining process is a proof-of-work (PoW) model that consumes large amounts of electricity. In contrast, Ethereum is moving toward switching to a PoS (proof-of-stake) mining model, in which the function works more efficiently, and as a result, the Ethereum Foundation aims to reduce power consumption of the blockchain by more than 99 percent.

The website about environmental problem:“Leaf Score” introduced “The 28 Most Sustainable Virtual Currencies in 2022”. For example, the platform of “Powerledger (POWR)” offers a decentralized network that can track and exchange energy in real time and eliminate the problem of unstableness in eco-friendly energy sources such as wind and solar.

As mentioned above, the issue of power consumption will become unavoidable in the use of virtual currencies in the future. Furthermore, it is necessary to pay attention not only to the amount of electricity consumed but also to CO2 emissions. While it depends on the type of power generation method, it could be absolutely significant to assess carefully how “new sustainable virtual currencies” evolve in the future.

Analyst, Global Intelligence Group (GIG)