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The rapid global growth of cryptocurrencies has benefited the world’s financial systems in many ways but has also raised concerns, particularly about the adverse environmental effects of mining. Policymakers around the world have been trying to solve the problem. For the crypto world to flourish further and maintain long-term sustainability, the copious amounts of energy being consumed need to be fed by healthier alternatives. According to a study conducted in 2018, Bitcoin emissions could single-handedly push global warming above 2°.
How are new Bitcoins Created?
The main method used globally for crypto mining is called Proof-of-Work (PoW). High-tech software is required to solve complicated math problems, the difficulty of which has been rising as better software and computers solve problems faster and faster. This creates a cycle of a large network of smart computers furiously working to be the first to work out the arduous problems, using unnecessary amounts of energy in the whole process. Another term for PoW is “mining”, as it is essential for the generation and in turn circulation of new coins. Bitcoin mining is done with Proof-of-Work.
How can Crypto Reduce its Carbon Footprint?
Fueling crypto mining with renewable energy resources instead of fossil fuels can be one step towards decarbonization. Another method that is being considered by various blockchains such as Ethereum, is shifting their mining process from Proof-of-Work to Proof-of-Stake, which will reduce overall energy consumption while mining crypto by significant margins.
How can Bitcoins be Mined with volcanoes?
Additionally, the country of El Salvador, home to 30 volcanoes - of which 20 are active, recently announced plans of building a “Bitcoin City”, the mining of which will be completely powered by the volcanoes situated in it. The utilization of the geothermal resource to generate power from the high-pressure steam produced by volcanoes can prove to be an effective, clean method to mine Bitcoin. Volcano mining is not new to the world, but it's still a largely untapped resource. A volcano power plant in Berlin established in 1999 can be taken as the best prototype upon which the Bitcoin mining city can be modeled. The plant consists of 16 shafts, up to 3000 feet deep from which circulated steam is used to propel the turbines situated inside. The turbines can generate up to 107 megawatts of power. This energy source currently fuels 300 computers working 24/7 to mine Bitcoins. El Salvador’s volcano power plants in its future Bitcoin city will work similarly. The decision to use renewable energy to mine Bitcoin on such a large scale was announced shortly after El Salvador made the cryptocurrency a legal tender in the country. Volcano mining will hopefully be a great accelerant for renewable energy development and succour Bitcoin’s energy consumption crisis, paving the way for a more extensive consideration of other energy alternatives.