Cryptocurrency traders have been in a good position as the prices of major cryptocurrencies continue to increase and reach new highs each day. The market-leading cryptocurrency in terms of market capitalization, Bitcoin have per token cost close to $50 thousand. The constant fluctuation in the cryptocurrency trade requires astonishing energy consumption levels to trade these digital currencies. Many investors and traders have raised a concern with the future of these digital currencies as mining them is leaving a lot of carbon footprint. Tesla & SpaceX CEO Elon Musk has also tweeted about the increased electricity consumption due to cryptocurrency mining, which led to a fall in Bitcoin token price.
A recent report by Deutsche Bank stated that if Bitcoin were a country, it would use the same amount of electricity per year to mine the currency that it does to power Switzerland for the same duration. These reports are indicating the extensive use of energy resources to mine Bitcoin. As of today, there are more than 9000 different registered cryptocurrencies, which contribute to the increased energy consumption at a considerable scale.
Bitcoin is the largest and the most popular token of trade, uses the majority of the energy resources to power mining and trade constantly. Considering the ever-increasing energy consumption in mining bitcoin, especially from the miners who use coal and other fuels to conduct business, Elon Musk has announced that Tesla will not be accepting bitcoins as a mode of payment. He continued to say that miners and traders start to use more efficient energy consumption methods; they will not accept cryptocurrency as a mode of payment for Tesla cars.
Bitcoin traders and miners have to provide proof of work, including many complex equations using high-end processing power. The system is designed so that every 10 minutes, Bitcoin is awarded to the traders and miners who successfully complete the high-intensity puzzles. As the prices for Bitcoin tokens have risen considerably since the beginning of the year, more and more interest has built up around the cryptocurrency trade, increasing the number of traders and miners worldwide.
More than 80% of the world’s cryptocurrency mining is done in China, affecting climatic conditions. In addition, China uses lignite, a type of fossil fuel, to power some aspects of mining. Tesla’s decision to move away from adding cryptocurrency as a mode of payment solely due to excessive energy consumption has brought this issue to light and is increasingly forcing miners and traders to rethink possibilities of a more efficient and effective mode of trade, which reduces carbon footprints.