The growing concern for the environment is something that has also reached the world of cryptocurrencies. The interest in cryptocurrencies has increased considerably in recent years.
The latest global comparative study of crypto assets conducted by the University of Cambridge in 2020, shows that cryptocurrency users grew almost three times from 35 million in 2018 to 101 million in the third quarter of 2020.
A big existing concern about the environmental impact of cryptocurrencies like bitcoin and other digital currencies is that they tend to require more and more energy as they become more popular and as their value increases.
Most digital currencies follow the bitcoin model. These types are generated through a process known as “mining”, in which computers worldwide solve complicated mathematical problems using the famous Probe of work (PoW), earning BTC as a reward.
However, according to many environmental reports, the process of mining BTC and other digital currencies requires a staggering amount of energy, seriously affecting the environmental impact of cryptocurrencies.
Researchers from the University of Cambridge have indicated that much of the electricity used in these mining operations comes from inefficient coal-fired power plants.
There are not only detractors of the PoW, but a recently released research report from Galaxy Digital has also calculated the energy consumed by the Bitcoin network and then compared it to other industries, including the banking industry. It found that Bitcoin consumes 113.89 terawatt-hours (TWh) per year, while the banking industry consumes 263.72 TWh per year.
Is Cardano the solution?
Cardano is a type of cryptocurrency that uses Ouroboros – a Proof of Stake (PoS) algorithm that is used to block and validate the transactions happening in the Cardano blockchain.
Cardano satisfies the evolution of an eco-friendly mining process with multiple features. So, this might be the future coin of profit for various investors. It seems Cardano and all coins with the Proof-of-Stake mechanism will also be more beneficial in the cryptocurrency investment arena shortly.
The selection of a block producer consumes 99 % of the energy in Bitcoin and other proof of work algorithms. Cardano employs a proof-of-stake mechanism, which is significantly more energy-efficient and, on the other hand, requires only six gigawatt-hours of energy each year.
*Estimate based on the number of pools in the Cardano ecosystem in September 2021
Even with these low numbers, there are many initiatives among Cardano Stake Pool Operators (SPOs) to reduce even more electricity consumption.
Among them is the Stake Pool alliance called Climate Neutral Cardano, in which there are two indispensable requirements for the SPO to be part of it:
- Operate their server infrastructure in a climate-neutral way and rely on 100% renewable energy from wind, water, sun or biomass.
- Use parts of their pool operator fees to donate to climate protection activities or compensation measures.
I am SO, what can I do to reduce my nodes electricity consumption?
Among the measures that some SPOs are putting into practice to reduce even more the consumption of electricity in their nodes are:
- Use of low-power PCs like Raspberry Pis. This tiny computer can be used as a Cardano validator node. They are widely used in the Cardano network, and there is an alliance that demonstrates the viability of these teams, Armada Alliance. There is controversy whether these devices will be able to support the RAM requirements of the latest update (1.29.0) that have brought smart contracts to the Cardano ecosystem.
- Use of solar panels. Some Stake Pool use solar panels, combining them with low consumption PCs like the famous Raspberry Pis. An example of this combination is the Stake Pool SOLRP
- Choose energy companies that offer renewable energy. Many of the SPOs have their validation nodes in their own home. It is possible to contract green tariffs that use 100 renewable energies. Most energy companies offer these tariffs to their users, certifying that the energy they use comes from renewable sources.
- Choose cloud computing providers that use renewable energy. More and more computer providers use renewable energy to power their facilities. For example, Google Cloud .
What is evident is that Cardano is becoming one of the largest existing blockchains betting on a low-power technology with high efficiency.