Updated: Apr 20
Have you ever heard of Proof of Work in cryptocurrency? I have... I heard of it when I first began blogging about Bitcoin. According to Investopedia, Proof of work in the cryptocurrency world means that in this decentralized network the users detect tampering in practice through hashes. These are long strings of numbers that serve as Proof of Work. Proof of Work makes it extremely difficult to alter any aspect of the blockchain since such an alteration would require re-mining all subsequent blocks. So, Proof of Work is a pretty big deal in cryptocurrency.
Miners and their computer power generate Proof of Work. Sometimes they come together with other miners to create a mining pool and increase the chances of mining blocks for the blockchain. All of this is in order to win over the transaction fees that users have to pay. The more power you burn, the more chances miners have to win over transaction fees.
I recently found out about a debate on the internet regarding Proof Work. Proof of Work is a great idea to get a transaction validated in this decentralized system, however, it is receiving many allegations online saying that the amount of energy used in order to make cryptocurrency work is outrageous. The reason for this is the massive computer power that has to be used.
I came across this chart provided by Digiconomist. It compares Bitcoin energy consumption with other countries. It is explained that “the entire Bitcoin network now consumes more energy than a number of countries, based on a report published by the International Energy Agency. If Bitcoin was a country, it would rank as shown below.”
I must admit looking at the chart was very surprising. Many say that this energy problem is because of the Proof of Work; others say that the solution to this problem is Proof of Stake. According to Investopedia, “The Proof of Stake (PoS) seeks to address this issue by attributing mining power to the proportion of coins held by a miner. This way, instead of utilizing energy to answer Proof of Work puzzles, a Proof of Stake miner is limited to mining a percentage of transactions that is reflective of his or her ownership stake. For instance, a miner who owns 3% of the Bitcoin available can theoretically mine only 3% of the blocks.” This alternative is criticized by many because those who own more crypto have a better chance to mine. I understand the discontent, but in contrast, in Proof of Work, some join forces to win over transactions, and this can also be unfair for miners who are left out of the mining pools.
Other alternatives have been created, like Bitcoin Green. Bitcoin Green is an organization that aims to create awareness of the impact that Proof of Work has on the environment. Aside from creating awareness on this matter, Bitcoin Green is actually a cryptocurrency (BITG) which is a sustainable coin. This cryptocurrency and its Green Protocol assure to have created, “an energy-efficient, extremely fast Proof-of-Stake and master node mining agreement to act as a sustainable replacement for Bitcoin’s current Proof-of-Work algorithm.”
Whether or not you believe in Proof of Work or Stake, we must admit that there is a whole lot of power being used in order for cryptocurrency transactions to work. Moreover, there are many other technologies and industries out there using outrageous amounts of energy consumption in order to function. Nonetheless, I believe this technology is the future and it should work towards being sustainable. I also believe crypto is still in its early stages, so how can we ask for everything to be solved when It hasn’t even reached its full potential? Even in its early stages, there are people that are making efforts on this matter, for example, Bitcoin Green and people creating solar-powered systems. Sure, with that I don’t mean that the crypto industry should wait for the worst and then act, but I do believe people have to cut crypto some slack.
Hope you enjoyed it! Feel free to comment.