Blockchain transaction and their Hidden Energy Cost

Blockchain transaction and their Hidden Energy Cost

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Bitcoin is famous for two things: its soaring value and the amount of energy which mining the cryptocurrency can consume. It is estimated that mining Bitcoin and other cryptocurrencies can potentially consume enough energy to power a small country. The more cryptocurrency mining gains traction, the more energy the process consumes.

If blockchain technology like cryptocurrencies continues to consume that much power, their future looks bleak. As it is, blockchain may be too expensive in terms of energy consumption to be scalable for business needs.

Defining Blockchain’s Energy Consumption Problem

One of the blockchain’s main advantages, decentralization, is also one of the main reasons why it can consume a lot of energy. The decentralized nature of Bitcoin as an example means that there are a lot of miners who apart from mining Bitcoin, also play a part in validating the transactions. Each miner has to compete to validate a transaction, a process that can consume a lot of computer processing power. When you consider that 3,500 new units of Bitcoin are mined each day, the power consumption can be astronomical.

As the price of Bitcoin grows, so does the interest in Bitcoin. More people are now either learning how to mine or becoming miners themselves. This has led to an increase in the hashrate, the measure of computation needed to complete a transaction, and therefore an increase in the power consumed by these processes. In a world with dwindling sources of energy, this can become a major problem.

It is comforting to know that the world has taken notice of the huge amounts of energy blockchain can consume. This means that more energy efficient solutions, such as encouraging Bitcoin miners to adopt solar energy, are being proposed. Yet, the fact still remains that unless this energy consumption problem is addressed, blockchain may not be a viable solution for businesses.

While we Await a Solution

It is important to note that as the number of transactions on the current blockchain algorithms continue to grow, so will the amount of energy consumed. This may lead to a situation where the Bitcoin miners can’t justify the cost of power and are therefore unable to make considerable profits. This has called into question the suitability and even usefulness of blockchain systems like Bitcoin.

Even as we continue to find ways to reduce the energy costs, there is something that can be done to reduce the strain on the existing blockchain algorithms. One way is to reduce the number of processes in a single transaction.

Call to Action

The way current blockchain systems are set-up prevents a reduction in the number of processes. But an off-chain solution like Quick X might allow users to complete the same transaction with fewer processes and in a relatively shorter duration. The result is users spend less time completing blockchain transactions and save energy.

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