The bitcoin network is secured through a proof-of-work process, where miners compete to solve cryptographic puzzles. This community of hundreds of thousands of bitcoin miners running redundant ledgers makes the blockchain extremely secure, but it consumes vast amounts of energy. Bitcoin miners may use as much as 0.5 percent of the world’s electricity and emit more than 0.1 percent of greenhouse gas emissions. This energy usage may be larger than that of entire countries, such as the United Arab Emirates, the Netherlands, or Argentina. Recently, attention has been focused on this energy usage, with a drive by some market participants to increase the use of renewable energy and reduce the use of electricity generated by fossil fuels. Bitcoin miners frequently are located in geographic areas with very low electricity prices, and they often seek out innovative solutions such as moving mining machines to areas with abundant hydroelectric power during wet seasons and moving to another location when that cheap power is not available. The growth of bitcoin mining in Texas has been spurred by electricity generated with flare gas, which would otherwise emit methane into the atmosphere. Of course, bitcoin enthusiasts like to point out that the environmental impact of bitcoin mining is less than that of gold mining or investment bankers traveling the world in jet airplanes. China at one time was home to more than 65 percent of the global population of bitcoin miners, but negative publicity about the environmental impacts has led regional Chinese governments to evict miners[1].
Proof of stake is the alternative way to secure a blockchain; it calls for the owners of large holdings in a specific digital asset to secure the network by depositing assets into coins and locking the value into an operating network. Proof-of-stake projects include Cardano, Polkadot, Binance, Stellar, and Cosmos. Although the ethereum blockchain is currently managed through proof-of-work, an environmentally friendlier proof-of-stake process may arrive with ethereum 2.0.
[1] “China is Kicking Out More than Half of the World’s Bitcoin Miners,” MacKenzie Sigalos, CNBC.Com, June 15, 2021. https://www.cnbc.com/2021/06/15/chinas-bitcoin-miner-exodus-.html
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