The Energy Problem of Mining Cryptocurrencies: Not so Eco-Friendly

Technological developments have been instrumental to the growth and advancement of mankind. Although new technologies are great in that they help us become more efficient in many ways, they bring along something unwelcomed. Touch screen cell phones have evolved into a miniature computer and can serve as a gaming device, a newspaper, and a video camera, all at once. However, people have become so attached to their phones that it distracts them from doing productive things. The car is an amazing invention that has changed the way people move. Cars are great in that they are reliable transportation machines, but they spew toxic gases into the air. They exacerbate the problem of air pollution.

Decentralization is cool, and it alters the way things operate. We all agree that blockchain is an innovation that has the potential to change the world, but we have to bring to attention the cost that comes with this new technology. With blockchain, we have cryptocurrencies, and with cryptocurrencies, we have mining. Many have deemed cryptocurrency mining a problem because of its detrimental effect on the environment. It simply takes up too much energy.

Bitcoin and Ethereum miners verify a transaction by solving a mathematical problem, and this is called proof-of-work (POW). 

While this method works, it consumes a lot of electricity. And by a lot, I mean that Bitcoin mining eats up as much electricity annually as the entire country of Nigeria does in one year. That’s just crazy! Cryptocurrency mining shouldn’t come with such an enormous cost. Proof-of-work mining has also caused a moral hazard problem. People are using company or institution computers to mine their personal cryptocurrencies. Some are leaving their mining machines running twenty-four hours a day, seven days a week in their dorm rooms, taking advantage of the free electricity with which they are provided.

There has got to be a better way.

And a better way there is! Proof-of-stake (POS) is a different mining method that does not produce block rewards. In a proof-of-stake system, new blocks are chosen based on wealth, which is also known as stake. Because there is no block reward, miners are rewarded with transaction fees. However, some claim that this too is imperfect in that the more wealth you have, the more rewards you receive. If having a larger stake yields higher percentages, then yes, it does seem to be unfair. There has got to be a way where everyone can receive a fair reward regardless of their initial stake.

And yet again, there is an even better way, a way that is fair for all. The CyClean way.

Today, we have observed the limitations to the currently popular mining mechanisms applied in blockchain technology. Tomorrow, we will give you a more detailed explanation of CyClean’s mining system, which I believe solves the problems discovered in POW and POS mining. I look forward to engaging with you guys tomorrow. Come back tomorrow for information that you do NOT want to miss!

** For more information about CyClean, please visit our website at cyclean.io.