As a decentralized concept, many leading cryptocurrencies pay out contributors who can prove their contributions to the global blockchain network, counter-intuitively, this puts a heavy reliance on centralized mining farms, which while beneficial for that specific cryptocurrency, they don’t necessarily help to ease the measurable difficulty and therefore the ease of mining and fees of trading. Small or single person operations with mining, and trading large denominations are hit the worst with transaction fees and block difficulty restraints because the leeway for entry is lessening as the state of cryptocurrency mining worsens. While contributors prove their work using power intensive graphics hashing methods, the ideal deployment would be a proof a stake configuration of the consensus algorithm, or a way contributors can stake, or prove transactions on the blockchain network, whilst considerably minimizing the power required. While some geographical areas may benefit from carbon neutral energy, most of the mining being done runs off traditional coal power plants. To put it simply, most of cryptocurrency mining is not in any way environmentally sustainable, however adopting to a staking method is going to change that for the better. As individuals continue to look to invest in cryptocurrency, they may not necessarily understand the detrimental environmental impact that acquiring and trading proof of work-based cryptocurrencies truly has, as they are most likely concerned with short term volatility gains, such as day trading.
Various concerning viewpoints exist toward the current and future of bitcoin and other cryptocurrencies. Author Anton Wahlman, an auto stock trader, argues a common one: “For something to be worth something – it actually has to be worth something…essentially everything under the sun has the potential to be worth more than cryptocurrency”. (Wahlman) Wahlman disregards that cryptocurrencies, unlike traditional currencies, property, and stock are not tried to a material value, rather acquire its value through a blockchain and consensus system, or a way contributors can compete for payouts to cypher blocks, verifying transactions, staking, or otherwise supporting the network, as to get paid a reward. They don’t exist to replace our traditional payment systems, at least not yet, but rather to act as an independent, more secure asset which longevity and volatility can be greatly benefited from in our society, especially in the near future. Given the current presence of online shopping and billing now that our society is more electronic payment reliant than ever, it makes sense that the plans of the cryptocurrencies of today will be able to in all means replace the traditional currencies of tomorrow. Taking a step back, the more accurate problems with cryptocurrencies are on a per coin basis; can cryptocurrencies exist without a reliance on a single 3rd party market such as the energy or the computer chip market, and if they can, how might they change with the times as to retain contributors and transactions that as a result can help ensure market stability and long-term scalability? Many financial experts maintain the argument cryptocurrency is a fad due to its heavy reliance on power or other markets, however despite common belief, cryptocurrencies can change overtime to adapt to a material good, encouraging its value to not just be reliable, but scalable as global trade, commerce, and unforeseen variables such as the Chinese government threaten its market. Author Andrey Sergeenkov, as an effort to document some of the extensive history of cryptocurrency mining and trading bans, elaborates on the most recent November crack down as a response to a power shortage across China in a coindesk.com article: “Following the statement from the State Council, provincial governments began to take proactive measures to eradicate crypto mining…Regulators cited bitcoin’s energy-intensive nature and how it poses a threat to the country’s environmental goals”. (Sergeenkov) Seemingly overnight both mining and trading of cryptocurrency was made illegal in China as a power conservation measure amidst a shortage as the Chinese government makes efforts to reach their carbon emissions goals for the year. As a result of the bans, the cryptocurrency market worldwide felt a significant loss that is still being recovered from, emphasizing the importance of replacing legacy style cryptocurrency mining with a less power reliant solution such as staking, and how it is a solution that spans further than the good of the market, as for many it acts as a token of financial freedom inside a controlling communist government. In a coal dependent society, our reliance upon such non-renewable resources will create surges in the price of energy in the future, further emphasizing the necessity of phasing out energy dependent cryptocurrency mining before it becomes too expensive to mine and trade as a direct result of the energy market, or even due to a government conservation effort like China’s burden on the cryptocurrency market because of the of mining and trading bans by the Chinese government.
As the energy market changes in the future, it will no longer be possible to easily mine profitably, making the switch to staking not just an option, but a necessity for those looking to retain and continue making their passive earnings. With the current state of the cryptocurrency market, we’ve seen countless adaptations of staking, so by the time the switch comes, developers will have been well prepared as to not just ensure the longevity of their asset, but to also ensure that outside variables, such as the market state of energy, are unlikely to affect the value of the asset in the long-term. Without staking, cryptocurrencies will either become unprofitable, or could even become restricted by governments who own most of the power infrastructure, or understandable demand satisfactory emissions. Overall, as the state of energy market exponentially worsens as the switch to renewable energies drives the price up, it’s ideal cryptocurrencies become less reliant on a high power consuming blockchain network, and to ensure the security is improved. In the past, the cryptocurrency market has seen some mal use that after further development, could mean legacy mining attacks, a situation where a single person or entity are responsible for a considerable share of the current block artificially inflating their payouts in relation to others working in different pools. are completely impossible the way we’ve seen them before. Author Jake Franken field talks of block attacks being impossible with proof of work: “Proof of Stake (POS) is seen as less risky…as it structures compensation in a way that makes an attack less advantageous for the miner .“(Investopedia) Seeing as blocks attacks are considerably less risky on proof of stake, It only makes sense that the big players in the cryptocurrency market will announce the switch to staking if they haven’t already. While an individual may not be specifically concerned with their power consumption due to cheap coal energy, especially if it is making them easy money, however as the power market inevitably worsens due to global warming, it doesn’t make sense for a digital currency to exist with its sole backing being a network derived on a measurable scale directly related to its power consumption, and seeing as proof of stake has been considerably successful as it currently exists in the cryptocurrency market, it only makes sense major cryptocurrencies will be making the change.
Cryptocurrency today holds an environmental burden that is directly a result of a nonrenewable energy reliant infrastructure, along with the worsening state of not just global warming, but many variables dependently tied to cryptocurrency mining and trading, such as the changing block difficulty, transaction fees and conversion rates, will cause it to become slowly but inevitably unprofitable in the near future, if it were not to create an environmentally sustainable adaption of their technology, that can without a doubt ensure its longevity as the variables related with it’s price and fees mitigate over to a more future proof and environmentally friendlier consensus method. To put it simply as cryptocurrency mining slowly but surely becomes unprofitable for smaller and smaller operations, therefore the entry price to start making passive money becomes more and more expensive, it exponentially worsens the fees associated with these legacy cryptocurrencies that use mining. Currently, many factors are worsening making the value go down as everybody tries to exit with their gains before they lose money, nevertheless, to guarantee the safety and security of any specific cryptocurrency assets’ value it is the smart idea to establish an alternative method of accumulation that doesn’t hold such a prominent reliance on traditional coal power. Looking forward, the same decentralized principles will remain, however the way we create and compete for these assets as a reward will change, not only for the better of the environment, but also, to ensure that its own longevity, volatility, and value can eventually supersede traditional paper currencies by giving more than just a tradable asset but to some financial independence.