Climate change is becoming perhaps the biggest long-term challenge of the modern era. Companies are changing their business models to accommodate a new way of environmental thinking—going green in any way they can. Environmental, Sustainability and Governance (ESG) efforts now make front page news and are forcing organizations to take the issue seriously or see pushback from consumers and government agencies.
And as cryptocurrencies and other digital assets attempt to become cemented as mainstream industries, they will be subject to the same touch ESG standards as other organizations now follow. Many crypto vendors are joining the Crypto Climate Accord, which is committed to achieving net-zero emissions from electricity consumption associated with crypto mining by 2030. They will do this by changing how they fundamentally mine crypto, and how they address energy consumption with greener options.
Enter green crypto mining.
Green Crypto Mining: Changing the Crypto Mining Model
Crypto mining is the process where new crypto currency is entered into circulation, and how a network confirms new transactions via a distributed blockchain ledger. Mining is conducted by using sophisticated hardware that solves complex computations so that the ‘miner’ can earn new tokens and get paid. One significant fundamental problem is the massive amount of energy used to run the mining algorithms, which translates into big environmental impact and carbon footprint.
The traditional model for crypto mining is called “Proof of Work (POW),” where miners compete to solve the complex mathematical computations. It’s a consensus mechanism that requires vast computational power (and therefore energy and emissions), usually in the form of stacked hardware.
The new model that is changing the game is called “Proof of Stake (POS),” which encompasses a set of new rules that are used to validate crypto transactions. POS redefines how the blockchain nodes agree on which transaction record is accurate. The nodes commit “stakes” of tokens in exchange for a chance to be chosen to produce the next block of transactions. The one that’s chosen (the validator) receives the financial token reward. While it may sound complex (it is), the bottom line is that validators do not need special equipment to solve the equations, which leads to far lower energy use, i.e. green crypto mining. The newer POS model has various pros and cons:
- Pros: More energy efficient, faster transaction speeds, censorship resistance, and a lower barrier of entry (no hardware required).
- Cons: Unproven model at large scale, can encourage hoarding of coins and tendency for centralization, and less robust security.
Greener Energy Base for Crypto
Above and beyond the core operational processes for mining crypto currencies, there is also a big effort by energy companies to use greener models for generating energy used in the mining process. One example comes from a company called Crusoe Energy Systems, which has recently raised $250 million to mine crypto currency in remote oil and gas fields across the middle of the US.
The company’s green effort revolves around its use of 45 shipping containers, inside which they put green crypto mining computers powered by natural gas that would otherwise have been shut down or flared (set on fire). It is already diverting 10 million cubic feet of gas per day that would otherwise be burned and release huge carbon emissions into the air. It’s a novel solution that has its challenges but improves the carbon economics of mining crypto.
Using Renewable Energy for Green Crypto Mining
A Houston-based company called Lancium recently raised money to build bitcoin mines in Texas that will run on renewable energy on “clean campuses” that will run 2,000 megawatts of capacity. What’s interesting about their model is that it is built to balance power supply and demand: customers who are flexible buy power when supply is high and shut down operations when it’s not; that helps to stabilize the power consumption and generation. Whether it’s windy or sunny, cloudy or breezy, demand can often outstrip supply. Bitcoin mining can help to even out those supply and demand (and energy price) swings. They are essentially transforming bitcoin mines into a “demand dial” that can be turned incrementally up or down in just seconds.
Moreover, the company is building mines in areas where wind and solar are abundant, and their clean campuses generate high computing throughput computing to resolve any energy congestion problems. Mines absorb renewable energy when supply is higher than demand, so they can monetize assets when there are no other buyers. Or they scale down the energy intake as demand rises on the power grid.
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Conclusion: Creativity Is Making Crypto Greener
While crypto mining is becoming a potential environmental monster, new business models and a better focus on sustainability and energy efficiency is helping to make this burgeoning industry more palatable for the world. As crypto and blockchain move more into the mainstream, there is increasing demand for innovative blockchain developers that will set the tone for the next generation of solutions in a greener crypto world. Simplilearn’s Blockchain Certification program can set you on the right path toward a lucrative career.