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Bitcoin mining is energy-intensive and therefore has an impact on the climate. As a result, several environmental groups, including Greenpeace, have decided to increase pressure on miners and bitcoin holders to rethink their transactions.
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At present, the entire transaction system of the most famous cryptocurrency in the world consumes as much energy as, for example, Sweden. “And in five years, bitcoin can be as energy-intensive as Japan,” Chris Larsen, a crypto-billionaire and co-founder of Ripple, told Bloomberg. He stands in the campaign called “Change the code, not the climate” alongside activist groups.
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The aim of the campaign is to draw attention to the issue of energy intensity of cryptocurrencies, first through advertising in the world’s leading publications. At the same time, Greenpeace, the Environmental Working Group and other activist groups are mobilizing millions of their members to join the campaign. According to Michael Bruno, who is in charge of the project, the goal is for key figures and corporations to commit to environmental regulations.
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“It’s a long-distance run, but we hope – especially when climate-conscious entities and individuals are investing in bitcoin – that we can convince the management of large companies that this problem needs to be addressed,” Bruneberg, former CEO. Sierra Club environmental organization. “Goldman Sachs, BlackRock or PayPal – there are many companies that we expect to help us in this endeavor,” Brune added.
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Now that Ethereum is changing, bitcoin is truly an outsider.
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Elon Musk has also addressed the environmental demands of cryptocurrencies in the past, announcing last year that his carmaker Tesla will resume bitcoin payments only after at least 50 percent of mining relies on renewable energy.
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Bitcoin is not affected by the fact that its main rival also plans to move to a “more sustainable path”. The Ethereum cryptocurrency is preparing for a major overhaul of the software, which will make it more environmentally friendly. Like bitcoin, it currently uses giant server farms to order transactions through a process called Proof of Work (PoW).
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But in a few months, Ethereum could switch to another method called Proof of Stake (PoS), which should be more energy-efficient. According to Bloomberg, there are also estimates that the PoS system could reduce energy consumption by 99 percent.
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Proof of Work a Proof of Stake
Proof of Work (PoW) – is a typical cryptocurrency mining system. We can imagine this as a competition to solve a mathematical problem. Whoever solves the problem receives a reward – typically a new (extracted) currency. Advantages include, for example, the fact that miners are independently involved in the operation of the cryptocurrency, but do not have to own the cryptocurrency. The biggest disadvantages certainly include high demands on computing power and high energy consumption.
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Proof of Stake (PoS) – is the second most widespread cryptocurrency mining system. The new blocks in the blockchain (digital ledger) are verified by the users themselves. The algorithm selects the user, who creates a new block (inserts part of the held cryptocurrency as a backup) and other users approve it (thus releasing the retained part of the cryptocurrency – the backup of the user who created the block). The main advantage is that the new blocks are formed directly by cryptocurrency users. Disadvantages of the system include the need to hold the cryptocurrency. It is also an unsuitable system for small and beginning cryptocurrencies.
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“Now that Ethereum is changing, bitcoin is truly an outsider. Some of the newer protocols – Solana, Cardano – are not as energy intensive, “said Larsen, who contributed $ 5 million to the campaign. Partly because he fears that investors’ interest in bitcoin will decline if nothing changes. But Larsen noted that he wanted the bitcoin and ether to thrive in the future.
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The transition to PoS is difficult
The campaign believes that about 50 key miners, cryptobours and key developers have the power to change the system on which bitcoin operates. But the question is whether the campaign will be successful. “I don’t think there is any chance that bitcoin will move to PoS,” Chris Bendiksen, one of the world’s leading bitcoin experts at CoinShares, told Bloomberg. According to him, there will be no interest in “destroying the security of the protocol.”
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The transition to Proof of Stake is technologically complex, and it took Ethere years to develop and test the code necessary for the change. “We also need short-term solutions, even if PoW is abandoned. Bitcoin is and will remain extremely important for the crypto worldwide. Bitcoiners – I know many of you may not believe it, but I’m not trying to go against you, “Larsen tweeted.
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We need short-term solutions as well, even if a move away from PoW happened eventually. Bitcoin is and will remain hugely important for crypto globally. Bitcoiners – I know many of you may not believe this, but I’m not trying to work against you here.
– Chris Larsen (@chrislarsensf) March 29, 2022
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Some Kryptonians may be bothered to deviate from a system designed by a person or group acting under the pseudonym Satoshi Nakamoto. But according to Larsen, times are changing.
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