Bitcoin's value skyrocketed until Elon Musk announced that it would pause accepting bitcoin as a payment method to purchase Tesla cars. The reason behind the suspension of the use of bitcoin is the mining method affecting the environment. In a tweet, Elon wrote that "Tesla is concerned about speedily increasing use of energy and fossil fuels in mining bitcoins and verifying transactions which lead to climate concerns." The bitcoin traders should also think about it before trading bitcoin. If you want to start trading, you can register at bitalpha-ai.io, as it is a great platform that combines traditional trading techniques.
After Elon Musk's tweet, the price of bitcoin, the world's largest cryptocurrency, dropped to 17%, and all other cryptocurrencies like Ethereum, and Dogecoin also dropped. In February 2021, Elon Musk announced that the car company Tesla had invested $1.5 billion in the popular cryptocurrency, Bitcoin, and it has started accepting bitcoin as a medium of exchange to purchase cars. However, there have been many questions raised that this decision of Tesla will impact the environment as in creating more bitcoins, a massive amount of energy is used. Even environmentalists and crypto experts announced that carbon emissions from mining bitcoins would be dangerous for the environment.
But do you know what exactly mining is? Let us learn about what bitcoin mining is.
What is bitcoin mining? How does it work?
Bitcoin mining is the process of generating new bitcoins, and this process is done by using various computers that miners use to solve complicated mathematical puzzles. As we know that cryptocurrencies are decentralized, they aren't issued or controlled by the government and must be mined. There is specific software that helps mine bitcoins, and miners are assigned 10 minutes to solve the complex puzzles. The miner who solves the puzzles first is rewarded with a block reward.
The process of bitcoin mining involves a huge amount of electricity and powerful hardware that miners use to verify bitcoin transactions and mine blocks. During the bitcoin mining process, a massive amount of energy is consumed. The miners are provided a reward for creating new bitcoins and for adding transactions in blocks. The transaction processing fee is also charged by miners which is also a source of income for them.
Mining cryptocurrencies rely on energy that is produced using fossil fuels. As the price of bitcoin increases, energy consumption also increases. The skyrocketing price of bitcoin provides more incentive to miners, and even the mining process has attracted many investors. Investors also consider the mining as a great and constant source of income.
Energy Consumption by Bitcoin Mining
The University of Cambridge has estimated that the bitcoin mining process consumes around 120 Terawatt Hours every year. It uses more electricity annually as compared to other countries like Sweden, Argentina, and Malaysia. The report of the University of Cambridge also recorded that bitcoin is the only cryptocurrency that ranks in the top 40 energy consumers. A research platform also estimated that bitcoin mining could consume more energy than all the data centers located globally, along with a carbon footprint that matches the footprint size of London.
The rate of adoption of bitcoin has constantly been increasing and at a rapid pace. People are using bitcoin and blockchain technology more than other technologies, and bitcoin alone can produce adequate carbon dioxide emissions that will make global warming increase to more than 2 degrees Celsius in less than 20 decades.
Even though the CEO of Tesla, Elon Musk, announced that it would not accept bitcoin for payment of cars, he is an early adopter and strong supporter of cryptocurrencies. There are many more companies that accept bitcoin as a payment method. Tesla also announced that it would not sell its bitcoin investments and use them to make transactions when mining starts consuming less energy. Before you accept bitcoin or other cryptocurrencies, it is important to understand the mining process and the energy consumed by specific cryptocurrencies. After Tesla, many other companies are now looking for cryptocurrencies that use less energy than bitcoin for transactions and mining.
Conclusion
The mining process of bitcoin severely impacts the environment. Every crypto user should think about it before mining or accepting bitcoin. It is better to look for cryptocurrencies that are not harmful to the environment.
