Not all market predictions come to pass. A group of people can come out and report that the future of playing in an online casino is bleak and that numbers will be dropping in 2022. Looking at statistics, however, things are the opposite. As per BusinessWire, the online gambling market is expected to grow to $81.08 billion in 2022, up from $73.42 billion in 2021. Improved internet accessibility and increasing smartphone adoption are driving the online global market to the roof. This article will not be talking more about internet gambling. We will examine how crypto energy has barely dropped even when the markets are crashing.
How Does Crypto Use Energy
Cryptocurrency mining appears to be a simple task with no significant environmental impact. The statement is not true because crypto is a massive consumer of electricity. There are a couple of reasons cryptocurrency consumes so much energy, such as:
- To verify transactions, digital currency like Bitcoin requires computers that help solve complex math problems. This is a highly energy-intensive process that many people do not realize. Miners who complete the mathematical equations faster than competitors usually get a small reward for their efforts in the form of bitcoin payments. When it happens, many miners use electricity in the hope of becoming the first to solve math puzzles. Sadly, while many computers struggle to find the solution, only one will get the reward implying the others only created a lot of carbon emissions for nothing.
- Mining is time-consuming- a single bitcoin transaction will take more than 10 minutes for a new block to be mined.
- Another aspect that makes Crypto mining energy intensive is that the entire process is split into two main areas: purchasing the hardware and buying electricity.
When crypto prices are high, miners may need to acquire new computers and costly graphic cards they will use for the mining process, which in turn consumes more energy.
How the Economy Affects Crypto
The beginning of 2022 confirmed that the cryptocurrency market is not immune to current economic issues. High-cap coins like Ethereum and Bitcoin experienced a downward trend for weeks. In addition to inflation and broader financial pressure, the collapse of UST (Terra stablecoin) sent panic waves in May, with commentators wondering if it meant that crypto was now going under. The changes in the market also raised the conversation on whether market crashes will affect crypto energy usage.
Did Market Crashes Negatively Affect Cryptocurrency Energy Usage
It turns out that even though crypto, at some point in the year, was experiencing a downward spiral, it did not put a significant dent in the environmental impacts of mining and the use of digital currencies. Talking to The Guardian, Alex de Vries, a Digiconomist (service that tracks cryptocurrency sustainability) and data scientist working for the Dutch central bank, said that the environment may not be getting a break even though some coins are experiencing a crash. It is even though the energy needed to mine the coins is usually determined by current market worth.
He explained that the environmental impact of cryptocurrency mining goes beyond the awareness and intended act of mining. Other factors that affect manufacturing include demands for parts and the surge in buying rigs.
De Vries also states that the environmental impact does not always feel too huge from an individual perspective. He estimates that bitcoin, on average, consumes 204 terawatt-hours of electricity annually. This is more than what some countries like Thailand consume. Ethereum is believed to use at least 104TWh annually, and dogecoin uses up to 4TWh.
Despite crypto crashes, the consumption rate has not drastically changed. It may indicate that the long-term power use of digital currencies may take ages to go down. De Vries estimates that bitcoin may have to drop about $8,000 to make a noticeable reduction in emissions. Even then, it would most likely be using 60TWh yearly.
How to Solve the Energy Issue
Cryptocurrencies are yet to prove their worth regarding the amount of power they consume. Miners may have to look into more renewable energy sources to take care of the environment. Alex confirmed through research that an increase in crypto prices demands more computer capacity to be dedicated to it, increasing carbon emissions. The capacity takes a long time to disappear after the value depreciates. Keep in mind that when the price of crypto goes up, carbon emissions will increase. De Vries explained that if the bitcoin price were to shoot to $25,200, it would require a yearly electricity consumption of around $184TWh.
Companies should not consider bringing more environmentally friendly or clean energy into cryptocurrency. Pre-mining is another process that can help prevent wasteful computing.
Mining cryptocurrency is a procedure that takes up a lot of energy. It’s interesting to learn that energy usage does not go down as expected, even when the market crashes. Read highlights of the situation in the article.
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