But China is choking on its own coal production and is making moves to reduce carbon dioxide emissions to reach carbon neutrality by 2060. The excessive energy consumption by crypto mining therefore is being scrutinised. Beijing recently announced that by April 2021 many crypto projects will have to shut down and that new projects will not be approved.
Oops. So now what. Stop mining? Too late. Bitcoin, Blockchain, Ethereum and their NFTs are here to stay. What needs to be tackled urgently, is the energy hungry mining process and its ‘proof of work’ authentication. Ethereum for example, the network on which most NFTs are stored, is busy trying to change the ‘proof of work’ to a less energy intensive ‘proof of stake’ instead.
The current ‘proof of work’ can, as mentioned, only be executed by miners using those very powerful computers to make sure the Blockchain rules are followed and to validate a new Block. In ‘proof of work’ the computational power is the defining factor to participate in the authentication of Blocks and hence those with most power will be the more successful ‘miners’.
‘Proof of stake’ is a lighter touch. Instead of relying on raw computer power, miners will be expected to have a stake’ (read real money deposits) in the system in order to be able to add Blocks. Miners, instead of investing tens of thousands of dollars in powerful computer centres, deposit money and become stakeholders in ensuring the validity of transactions. This would require much less computer power and thus reduce energy consumption in buckets.
Ethereum is the first Blockchain set-up where ‘proof of stake’ is being worked on. Given that the booming trade in NFTs is mostly recorded and validated on Ethereum, we may sigh a sigh of relief that the insane energy use of crypto assets will fade. Not everyone is sure that this will be secure enough, but at least the awareness is there that the current state of mining is too polluting.
New technologies and more readily available renewable energy will have to be explored hand in hand to get to grips with crypto guzzling.
So is Bitcoin too hot to handle? The planet for now certainly thinks so.