Crypto Mining and Its Effects on the Environment
So, What is Cryptocurrency Mining?
Crypto-mining, or mining in general, is the process that involves verifying blockchain transactions and generating new coins.
It is called mining because there are a finite amount of coins, just like any other natural resource. For example, the maximum amount of Bitcoin that can be generated is 21 million.
The miners must solve complex mathematical problems to generate and receive new coins. The miners are also rewarded for successfully verifying the transactions since they prevent fraud.
As the miner network grows, the difficulty of mining new coins also increases since the coins are scarce. For instance, a personal computer was enough to mine approximately 200 Bitcoins in 2009. It would take the same computer over 98 years to mine a single coin in 2014.
How Does Mining Work?
Crypto mining takes place on a decentralized platform known as the blockchain. Since blockchain doesn't have a centralized authority, a consensus protocol known as the proof-of-work is implemented to secure the network from frauds and external attacks.
Miners use powerful machines to solve complex mathematical equations configured as cryptographic hashes - these odd numbers are generated to ensure secure data transfer on the public blockchain network.
Miners compete among themselves and target the hash value generated by a transaction. The first miner to figure out the code adds a block to the ledger and receives a reward for the task.
The difficulty of solving cryptographic equations increases over time as the miners deploy more powerful machines to solve the proof of work quickly and mine more coins.
Methods of Mining Cryptocurrencies
In the initial days, the CPU was the go-to machine for mining cryptocurrencies. However, CPU mining is highly impractical today as generating even an insignificant amount of cryptocurrency can take months. So, now what?
Well, GPU mining is one way to speed up the process. Crypto miners install multiple GPUs in a rig setup to maximize the computational power. However, the process can generate heat, and the system requires an efficient cooling setup.
Well, there's another method that's specially designed to mine cryptocurrencies. We're talking about Application-Specific Integrated Circuit (ASIC) that produces more coins than GPUs.
However, GPU and ASIC mining methods are expensive; hence, miners are shifting to cloud setup since it allows them to host and rent a mining rig for a specific timeframe.
Effect of Crypto Mining on the Environment
As mentioned earlier, the ever-growing coins' scarcity increases the mining difficulty. As a result, miners require computers with exceptional power to generate more coins. However, these computers are also responsible for causing detrimental effects on the environment. But why?
A single Bitcoin transaction verification consumes around 707 kWh of electricity. That's right. As a result, the computer generates heat and needs to be cooled down.
That's not all!
According to research by the University of Cambridge, Bitcoin utilizes more electricity annually than entire Argentina. The analysis also suggested that Bitcoin consumes 121.36 terawatts hours of electricity annually - which is more than the combined electricity consumption of tech giants including Google, Apple, Facebook, and Microsoft.
What's more interesting?
In the USA alone, hundreds of abandoned factories and power plants are being transformed into crypto mining farms. For example, Greenidge Generation, a former coal plant in Dresden, New York, shifted to natural gas and started mining Bitcoin. As a result, the plant's greenhouse gas emissions increased massively between 2019 and 2020.
Furthermore, such mining plants require a large amount of water. It's estimated that around 139 million gallons of freshwater are drawn out of Seneca Lake to keep the Greenidge Generation plant cool. Surprisingly, the same water, now 30-50 degrees hotter, is discharged back into the lake, endangering marine life.
While crypto mining undeniably promises a rewarding fortune to miners, it comes at a detrimental cost that may affect the entire globe. Over time, the environmental degradation will increase since miners will seek more powerful machines to generate the scarce coins.
Conclusively, crypto mining effects are hazardous, and decisive action is needed to overcome the environmental impact.
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