Melanie Boulton

20h ago

Trend: Making Bitcoin greener

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The amount of energy cryptocurrency requires is an increasing concern among

environmental campaigners, governments, and individual users. However,
campaigners argue that a simple change to the network could rectify this.

As the popularity of cryptocurrency increases, it relies on a large network of users,

rather than a central bank or commercial clearinghouse, meaning it requires ever
bigger amounts of computing power.

The currency also relies on “miners”, which have to perform a huge number of
computer calculations, ratcheting up the need for high-powered computer
processing, further adding to the energy demand.
Why it matters: Campaigners and governments are increasingly focused on
cryptocurrencies’ environmental impact out of concern they might hinder global
climate goals.

The details: Environmental groups such as Greenpeace USA and Environmental

Working Group have launched a campaign calling for Bitcoin’s investors to make a
single change that could cut its energy consumption by 99%.

Bitcoin uses a ‘proof of work’ mechanism, unlike cryptocurrencies such as

Ethereum, which use a ‘proof of stake’ mechanism. Although they work differently,
both mechanisms are used to confirm a valid transaction has taken place –
however, ‘proof of stake’ requires significantly less computer power.

Environmental groups have said a switch to a different model, like “proof-of-

stake,” rather than the energy-intensive “proof-of-work” would reduce Bitcoin’s
energy demand significantly.

Yes, but: The thing this campaign just doesn’t get, the Bitcoiners say, is that proof-of-
work is a key part of Bitcoin’s value proposition. They see proof-of-work as vital for
blockchain security and decentralization and they’re very protective of the mechanism.

Beyond that, the campaign mistakenly assumes that it would be easy to even make
this change. Bloomberg reports that “The campaign believes that about 50 key
miners, crypto exchanges and core developers have the power to change Bitcoin’s
code.” Jerry Brito, executive director of DC-based crypto think tank Coin Center,
says that’s just not accurate.

By the numbers: The New York Times posted on its Twitter account that a single
Bitcoin transaction requires more than 2,000 kilowatt-hours of electricity, the
equivalent of 73 days of power for the average American household.

It’s not only governments and campaigners who are concerned; a recent OnePoll
survey found that 34% of American adults considered reducing the carbon
footprint of cryptocurrency as important and would make them more likely to use
it.

By bringing in these changes to how Bitcoin works, therefore, it might make it a

more attractive investment altogether.
What’s next: At the same time as the environmental campaign for Bitcoin’s switch,
the White House’s science and technology team is seeking public commentary on
cryptocurrency’s impact on energy use and the climate.

It comes as Biden asked for a report on the “potential for digital assets to impede
or advance efforts to tackle climate change and the transition to a clean and
reliable electricity grid”.

Depending on the results of the report, the government may have to act if the
environmental impact of cryptocurrency is too damaging.

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