Do you want to start a cryptocurrency software development company? There are a lot of things you need to know since the impact of cryptocurrency cryptocurrency has a lot of effects. While the mainstream financial environment once disdained cryptocurrency as tools for speculators and criminals, the industry has made a lot of progress in establishing itself as a world-changing space that is legit.
Ether and bitcoin have seen massive growth in users and price. However, there are still a lot of doubts about the consequences of the adoption of cryptocurrency. A lot of environmentalists and sceptics have raised a lot of concerns about the consumption of energy when mining cryptocurrency. This may cause climate change and increased carbon emissions.
Why cryptocurrency mining requires energy
The astronomical costs of energy are due to the proof-of-work block-chains competitive nature. Instead of storing account balances in one central database, impact of cryptocurrency transactions are typically recorded by a distributed miner’s network, with incentivized rewards by the block. These specialized computers engage in a computational race to track and record new blocks, which can be created by solving technical cryptographic puzzles.
Most cryptocurrency advocates believe that this system has a lot of advantages over centralized currencies. This is mainly because it doesn’t rely on trusted intermediaries or a single point of failure. The puzzles of mining require a lot of energy-intensive computations.
The most widely known network of cryptocurrency is bitcoin and it uses around 121 terawatt-hours of electricity yearly. This is more than what the entire country of Argentina uses. The Ethereum network uses power as much as the entire country of Qatar.
Cryptocurrency software development is also time-consuming and may or may not be profitable. As the price of impact of cryptocurrency increases, the mining tends to become less efficient. The mathematical puzzles to create bitcoins get more difficult as the value goes up. However, the transaction throughput is constant. This means that with time, the network will use more computing energy to process the same transactions.
Digital currencies and fossil fuels
There is a close link of fossil fuels to cryptocurrencies in a way that a lot of investors have not yet acknowledged. Coal and other fuels are currently a major energy source worldwide. However, burning coal is a contributor to climate change due to the carbon dioxide released from the process. The mining of bitcoin accounts for about 36 million tons of carbon dioxide emissions every year.
Cryptocurrency advocates still defend the mining
Cryptocurrency supporters have downplayed the consumption of energy by cryptocurrency mining. They have claimed that mining operations concentrate around areas with enough renewable energy. They estimated that around 74% of the electricity used to power the bitcoin network was from renewable energy sources hence making bitcoin mining renewable-driven than other large-scale industries in the world.
The claims are based on the fact that mining is not done by one cryptocurrency software development company and that miners aren’t geographically fixed and this allows them to move to search for surplus energy. Some petroleum companies are still exploring ways to power mining from flares of gas which could otherwise be wastage.