The power consumption of cryptographic technologies remains in dispute. According to him Bitcoin Electricity Consumption Index of the University of Cambridge, it is estimated that Bitcoin, the most widely used cryptocurrency network, consumed a estimated amount of 26.73 Terawatt-hours of electricity per year and 167.72 Terawatt-hours of electricity through energy assets at the point of production, more than the Netherlands, Argentina or the United Arab Emirates, using 2020 estimates.
Secondly, Ethereum, the second largest cryptocurrency network, is estimated to use 87.29 Terawatt-hours of electricity per yearbased on energy consumption through May 27, 2022, comparable to energy consumption in Finland. The average Ethereum transaction required 210.16 kilowatt-hours of electricity, which is the same amount of energy as an average American household consumes in 7.1 days as reported by the Digiconomist site.
“Both Bitcoin and Ethereum work under the ‘Proof of Work’ consensus algorithm, which means that at the time of making a transaction all the nodes compete to verify a block of the chain. This requires the nodes to consume a certain amount of energy. In the case of Bitcoin, for example, it consumes more energy than some entire countries.”, explained Leo Elduayen, CEO of Koibanx. However, the specialist clarifies that there are various innovations that allow, from its conception, to apply a more conservative model of energy and the environment. It is about the new blockchain 2.0 or “second generation”.
“Among them, Algorand, Avalanche, Solana, Polygon, etc. Although I do not believe that Bitcoin or Ether can be dethroned from the place of market leaders that they bring, I am convinced that highly performing, efficient and secure technologies such as Algorand’s blockchain, for example, will undoubtedly begin to occupy a preponderant space in some aspects for which today Bitcoin and Ethereum are no longer efficient, for example: micro-payments or micro-finance”, expressed Elduayen. In the same way, the expert commented that the correct thing would be to evaluate them in comparison with the current system. In other words, the infrastructure of centralized systems also has an energy and environmental cost. “There the results do not seem excessive at all, on the contrary. Like any type of technology, you are always looking for the most efficient. The key to the question is whether we will analyze it as something completely secondary for a few to speculate and that consumes X amount of energy, or as the technology that will financially include the entire region and that today consumes less than its existing alternatives“, developing.
Elduayen also commented that “today the nodes only work, that is, they are profitable; if they have access to cheap electricity. Cheap electricity is only produced in places where the network has some idle capacity, not in places where more production is demanded from the network than it already brings or is capable of producing.”. So if that electricity is idle, the debate of whether that electricity should go to feed a small town in the suburbs or be bought by mining companies, in a market where electricity is partially managed by the private sector, has many edges to consider. .
However, why do the specific case of crypto tend to raise more questions? For Elduayen, it is a fear of novelty. “The new or the unknown always raises questions, threatens the interests of other companies or industries that are already established, and challenges the existing model. Personally, I have no doubt that the benefits of cryptocurrencies are greater than their disadvantages. Many centralized entities and inefficient players consider that “the world must remain as it is” and still do not realize the advantages that they could find within this new ecosystem“, summarized. On the other hand, he considered the businessman that the structure of the traditional financial world is more opaque than that of finance based on blockchain.
For the future, there will be other alternatives that are possibly related to more technologies and methods “green”. “This technology is taking giant steps and my recommendation is that any person, company or government is not left out. There are many alternatives, it is always important to educate yourself to make the best decisions and be linked to projects such as TRAM, PlanetWatch, ClimateTrade or the tax benefit granted by the Municipality of Marcos Paz, in Argentina, to its taxpayers as an incentive to recycling, among other actions. All projects built on Algorand and RSK”, he concluded.
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