Having recently tipped a decade since conception, Bitcoin continues to prove itself to be the technology to redefine business as we know it.
Considering the technology used to drive Bitcoin needs no intermediaries to make, receive and run payment, the popularity of this incredible leap in capability waxes more than it wanes, and growth is steady across all sectors currently touched by Bitcoin and blockchain technology.
While all this progress is dizzying -we’re overly excited about the concept of a business world made fairer and more exciting with cryptocurrency- there is a problem with cryptocurrency that cannot be overlooked. The high carbon footprint created by Bitcoin Mining looks set to run deep and wide. And we’re still figuring out how to approach it.
The mining process involves a peer to peer web of computers, oftentimes referred to as validators. Validators live up to their name in that they perform something called Proof of Work. Proof of Work is a brigade of computers that solve intense cryptographic problems and give proof to blocks of transactions that are recorded on the public ledger, or blockchain. This can be viewed by all computers, and it means that total agreement can be held that achieves a guarantee of proof. These validators are better known as miners. In the case of Bitcoin, it’s miners that validate each block in the blockchain with ‘mined’ currency. It’s actually the process that is used to bring in new coins to the Bitcoin network. While this is all fascinating, it’s also a process that gobbles a brow-raising amount of energy- one which many enthusiastic blockchain fans feel deflated by.
What we now know is that the energy mining of Bitcoin is huge- comparable to that of a small country, and this energy consumption is only tipped to rise. It has even been suggested that in the near future, mining of cryptocurrency could outweigh the costs associated with mining some precious metals. It’s also been aired that if the adoption of crypto continues to rise, that this contribution to emissions could easily push the critical level of global warming to above 2 degrees.
However, solutions like the Lightning Network are expected to help. The Lightning Network is seen as a second step to the payment protocol, and it operates on top of a blockchain, for example, Bitcoin cryptocurrency, and makes it faster and easier to make transactions between nodes.
Commonly posted as the solution to the Bitcoin growth concerns, the Lighting Network is perhaps better described as an option where channels between users will only be recorded on the blockchain when the channel isn’t open. The result is expected to lead with a huge reduction in energy use, as only very little energy is consumed in the process.
The question remains as to how proof of reduction in energy use will emerge. We look forward to discussing this important aspect of Blockchain tech in future blogs.