While crypto is starting to be a regular subject of discussion even amongst non-crypto believers, the increased demand and interest in cryptocurrencies requires more computer power to verify transactions on the blockchain. Therefore, an increasing need in crypto mining farms. But what is Crypto Mining and what challenges are in front of us?
What is crypto mining?
Cryptocurrency mining consists in verifying cryptocurrency transactions made between clients and receiving a fee for each verified transaction. To make it simple, it’s the same principle a bank would charge a fee to transfer funds between two accounts. In the Cryptocurrency world, you need miners that are using specific dedicated computers to verify transactions.
By using computers to verify millions of cryptocurrency transactions made every day, comes an environmental impact and a challenge on improving computer processing power while decreasing the need for electricity.
Environmental impact of crypto mining
To give you an idea, Bitcoin Mining electricity consumption is on the 27th ranks of country ranking, annual electricity consumption. It consumes 138.85 trillions of KW per year and accounts for 0.64% of the total electricity consumption worldwide.
It doesn’t come as a surprise, due to the low cost of electricity over there, that China powers nearly 80% of the global cryptocurrencies trade (65.08% on average monthly share of total hashrate worldwide). 40% of China bitcoin mines are powered with coal while the rest use renewables. China banned trading Crypto in 2019 but mining is permitted.
Revenue on crypto mining went from around 10M per day in January 2020 to 50M per day in January 2021.
While it is clear that crypto mining electricity consumption has an environmental impact and could become an issue in the near future, some companies such as Tesla are adding it to their balance sheet. Guggenheim Partners and Bank of New York Mellon are looking into financing Bitcoin transactions. Some others such as Blackrock have said that investment in the future will be evaluated In part on how they plan to meet the climate challenge.
Green energy may be the solution. Mr. Dorsey of Square said in a statement that its company committed to net-zero on carbon emissions by 2030.
Conclusion: Future of Cryptos and national digital currencies
It is a fact that the world population is growing exponentially as is the interest in cryptocurrency. At the moment, not even 1% of the population holds cryptocurrency. Will you wait until 10% of the world population own Cryptocurrencies to chip in? Did you know that so-called national digital currencies have already been launched? China launched a national digital currency they have worked on since 2014, the e-CNY or Digital Yuan or Digital Currency Electronics Payment. Currently in the public testing phase, Chinese authorities are planning to authorize paying with the digital Yuan during the next Winter Olympic Games in Beijing in 2022. This is tomorrow! Will you join the crypto believers? If you are not ready to go into mining yet, but want to start getting exposure in crypto, open an account with Advanced Markets today and start trading with confidence.