18 July 2021
With the growing popularity of cryptocurrencies, their main problem has become the need to attract large computing power. Thousands of installations are scattered around the world for performing mathematical calculations. This is a huge blow to the energy system of the entire planet and a big environmental problem.
Why do cryptocurrencies need computing power?Cryptocurrency is a part of the blockchain system, i.e. ownership and transaction data is permanently stored simultaneously on multiple computers. To add new data to the existing data, complex mathematical calculations are performed in the blockchain system.
Calculations are performed on the devices of users who assemble mining farms of various sizes. For each decrypted block, the owner of the capacity receives a crypto coin.
Ethereum is most efficiently mined on video cards. The more powerful the video card, the faster the owner will receive the reward. Powerful chips have a lot of power consumption. For example, a mining farm with 6 video cards consumes 500 W / h, but this is considered a home option. Of course, huge hangars with hundreds of video cards consume colossal amounts of energy.
Where does the trend towards environmental friendliness of cryptocurrencies come from?For a long time, no one thought about the environmental friendliness of mining. Elon Musk was the first to announce this publicly. In 2020, he announced the start of accepting payments in cryptocurrency, and already in 2021 he turned off this opportunity.
The main argument for this event was the high power consumption of mining and the damage to the environment. It is difficult to say whether this was the real reason for Musk's refusal, but the problem still remains relevant.
What did the founders of Ethereum come up with?The leadership of the Ethereum Foundation was the first to draw attention to the existing difficulty. To reduce the amount of electricity consumed, they plan to completely transfer Ether to the Proof of Stake model. This is expected to reduce the power consumption of Ethereum mining by 99.95%.
This difference is due to the fact that the PoS model does not require the use of video cards to mine new coins. In general, large capacities are not needed and Ethereum cryptocurrency can be mined even from an office laptop.
The PoS model is changing the way blockchain works. The one who has more Ethereum coins on his account will have a better chance of getting a new block. Thus, you only need to confirm the presence of a certain balance of the wallet.
From an environmental point of view, this is a great solution. Ethereum mining now consumes an amount of electricity comparable to a small country. Unfortunately, such a decision will raise the threshold for entering coin mining. It is possible that for effective work, you will need to spend several tens of millions of dollars on Ethereum.