The development of cryptocurrencies adoption is increasingly massive in recent years. With various positive aspects of cryptocurrencies such as transparency, transaction speed, and also security, some countries such as El Salvador have begun to adopt cryptocurrencies as a domestic payment instrument. Since the emergence of Bitcoin in 2008, various cryptocurrencies have emerged with their various uses and advantages. One issue that comes with the proliferation of the use of cryptocurrencies and the expansion of adoption in the world's economy is the electrical energy used to keep the blockchain system running. According to information from the Columbia Climate School, the energy required to run the Bitcoin system alone exceeds Argentina's annual energy consumption. Furthermore, such massive consumption of electrical energy produces 65 megatons of carbon dioxide every year, which is equivalent to the total emission produced by Greece each year. Even the energy used in the Bitcoin mining process per minute is enough to meet the energy needs of the average United States household for 17 years. Furthermore, based on research conducted by Cambridge University, Bitcoin mining uses more electricity than the combined electricity consumption of Ukraine and Norway per year.
In addition to the use of cryptocurrencies, with their various advantages and conveniences, it has brought with it a more fundamental issue in recent years, namely the increasing use of energy. In addition, the issue of where the energy comes from is also important because the majority of energy sources in the world still come from extractive mining products such as coal. According to Coinbase, the use of energy in the crypto system is because the majority system is still oriented towards the Proof of Work system rather than the Proof of Stake system.
It is clear that the massive use of energy to keep the cryptocurrency system running requires an increase in the amount of energy produced. This has in fact triggered an increase in the production of electrical energy, such as from coal. The revival of a coal mining company, for example, occurred in the United States where one of the power plants that almost went bankrupt since closing, Hardin, who suffered a loss from 2018 again, got profits in his business due to the increasing energy demand for crypto miners. Even in 2020, the energy generated from this coal power plant is only intended for crypto miners. According to The Guardian, Hardin is a small part of the revival of coal-fired power plants due to the increased use of crypto in recent years.
Efficiency of Cryptocurrency
Cryptocurrencies are still developing massively in the last 10 years. The wider adoption of the community shows the potential for the financial system which actually started because of the financial crisis in 2008 with the emergence of Bitcoin which was allegedly developed by Satoshi Nakamoto (could be the name of the group/person). With systems that can still be developed, such as from Proof of Work to Proof of Stake, the blockchain system can reduce the consumption and energy required by the cryptocurrency system to keep the system running. This was conveyed, for example, in the “Change the Code not the Climate” campaign coordinated by Greenpeace United States and the Environmental Working Group that Bitcoin and cryptocurrencies need to improve the system in cryptocurrencies to make system efficiency, which then reduces energy consumption in the running of the system.
To NBC News, researchers from the Ethereum Foundation said that by using a proof of stake system, the energy used can be reduced to 99.99% lower than using a proof of work system. This certainly gives optimism for those who support crypto and also pays attention to the environment. Some cryptocurrency systems will and have used proof of stake systems such as Ethereum and Cardano. Reporting from Forbes, Proof of Stake removes the system elements of computing competition and makes one machine only work to solve one coding problem at a time. This is different from Proof of Work where many computer machines try to complete many transactions at one time which of course requires a lot of energy.
Utilizing renewable energy
With the massive amount of energy used, the use of environmentally friendly energy is important and pivotal, especially to support the cryptocurrency transaction system which is increasingly being adopted by the community. This has been done, for example, in Costa Rica, which has a surplus of renewable energy. According to DW News, the energy needed to carry out crypto mining is obtained from energy generated from hydroelectric power plants. However, Jose Daniel Lara, a researcher from UC Berkeley said that Costa Rica is a special country because it has a surplus of renewable energy and the logic of crypto mining with renewable energy is possible.
Therefore, it is important for countries that want to adopt the use of cryptocurrencies to not only pay attention to the convenience and advantages of using cryptocurrencies and blockchain technology, but also to pay attention to energy sources to keep crypto technology systems running well.
