Reducing Crypto Energy Use with a Simple Code Change

There is an estimation that the use of electric vehicles worldwide prevents the release of about 50 million tonnes of CO2 into the atmosphere. This is less than half of what Bitcoin produces each year. There has been an increase in Bitcoin's carbon footprint by a factor of five in just two years. This is due to the exponential growth of "mining" it with fossil fuels.

On the other hand, Greenpeace and the Environmental Working Group claim that a simple software update to Bitcoin can resolve all of this (i.e., changing its code). Change the Code, Not the Climate is their new campaign. With this campaign, they ask Bitcoin software developers to replace the network's inefficient system for verifying transactions with one that is more environmentally friendly. They claim that making the change would reduce Bitcoin's carbon footprint by 99.9%. 

How Is This So?

This code change would be simple to implement in Bitcoin. According to Greenpeace, the switch to PoS (Proof of Work) would require the collaboration of just thirty entities. This will include the largest mining operations and exchanges, such as Coinbase, Binance, and code developers.

However, this does not account for the fact that everyone would have to use the updated software. As a result, most miners are cautious and protective of their investments when it comes to making changes to the software code that supports their earnings.

According to Chris Bendiksen, CoinShares commentator, there is no chance that Bitcoin will ever switch to PoS. "Bitcoiners don't want to compromise the protocol's security in this way," he says.

Bitcoin's code has previously caused issues. In 2016, there was a proposal for change to address intermittent traffic issues while keeping the transaction fees stable. Even though it was a simple fix, the change divided the Bitcoin community. Most people prefer the slower, more expensive status quo from a survey.

Even if some users decide to abandon PoW, the original Bitcoin network will continue to function in some capacity. This version of PoW would keep the same name, branding, and miners.  This slight change of code can alter many things as the PoS spinoff may turn out to be another failed experiment.

Energy Consumption

This year has seen a rapid rise in interest, activity, and hype in public blockchain use cases. This includes cryptocurrencies, NFTs, decentralized finance apps, and decentralized autonomous organizations. 

However, two major interconnected issues have arisen due to this rapid growth, making it difficult to adopt public blockchain use cases. The first is that certain blockchains, such as Bitcoin consume a significant amount of energy. The second issue is scalability, related to how expensive and time-consuming it is to use blockchains like Ethereum. Clients can expect these barriers to become more popular as more industries adopt public blockchain use cases. An example is consumer packaged goods brands issuing NFTs.

How Is Energy Used In Mining Bitcoins?

Early in 2021, the public blockchain energy debate received much attention when China shut down almost all cryptocurrency mining. In addition, Tesla had a change of mind about accepting Bitcoin as payment due to rising concerns about the network's energy use. 

Their reasons of concern are valid. For example, Major blockchains such as Bitcoin and Ethereum use a "Proof of Work" system to reach a consensus. In this system, "miners" use a lot of computing power to solve cryptographic puzzles and check the transactions of network participants to reach a decentralized agreement. 

According to recent data, Bitcoin mining alone consumes 117 terawatt-hours of electricity each year. This accounts for about 0.5 percent of total global electricity consumption and has increased tenfold in the last five years. To remain economically competitive, miners must frequently upgrade to the most recent mining chips (application integrated circuits or graphics processing units). 

Why does Bitcoin consume so much energy?

Bitcoin, in general, consumes a lot of energy because miners compete with one another, and the network is extremely busy. As a result, miners must expend a lot of energy to be the first to solve the equation that will earn them a Bitcoin. 

Miners seek larger, faster computers that consume more energy to solve equations more quickly. They must solve more equations as the number of Bitcoin network transactions increases.

Environmental Impact of Bitcoin's energy use

The amount of energy used by Bitcoin has a significant impact on the environment. It is the amount of energy that a network requires to run and the type of energy used and the amount of electronic waste produced.

Carbon's Footprint

According to Digiconomist, the carbon footprint of a single Bitcoin block in 2021 was approximately 816 kilograms of carbon dioxide equivalent (CO2). This is approximately equivalent to the carbon footprint of 1,808,913 Visa transactions or 136,028 hours of viewing YouTube videos. The Bitcoin network emits 6418 metric tons of CO2 into the atmosphere each year.

Most of China's electricity is generated by coal-fired power plants, which is extremely harmful to the environment. As a result, when most Bitcoin mining was done in China, it was done on a grid that coal-fired power plants mostly powered.

Electronics-related waste

Unlike the requirements for other cryptocurrencies, Bitcoin mining equipment cannot be used for any other purpose. This generates a significant amount of electronic waste from the computer hardware. According to Digiconomist, in 2021, a single Bitcoin block will generate 77.80 grams of electronic waste, which is equivalent to the weight of 1.72 golf balls.

Is Bitcoin Worth the Environmental Cost?

Elon Musk isn't the only one concerned about how much energy Bitcoin consumes. Even for those who support cryptocurrencies in general, the environmental cost of Bitcoin may be prohibitively high, especially now that people are dealing with the real-world consequences of climate change. 

On the other hand, proponents argue that Bitcoin and other cryptocurrencies are well worth the investment. This is because they have the potential to change how people use energy. Moreover, with changes to the crypto ecosystem, such as the addition of more energy-efficient currencies and updates to existing networks, it may be possible in the future to find the best of both worlds with energy-efficient cryptocurrencies powered by renewable electricity.