Bitcoin mining is being highly targeted for its growing energy use. The surge may be approaching a tipping point where, in order to prove to be a true game changer, the crypto platform will need to become “cleaner and greener”.
However, Bitcoin isn’t receiving a lot of attention from investors- a major reason for this is the upcoming Ethereum Merger.
Recently, Kyle McDonald told CoinDesk TV’s ‘First Mover’ that the Bitcoin network may be ‘regulated away’ because of its energy consumption.
Kyle McDonald is an independent researcher. He predicts that the Bitcoin network may be “regulated away,” leading to a significant price drop.
McDonald went ahead to suggest that people should now start selling Bitcoin. The reason is that after the Ethereum blockchain makes a shift to a significantly less energy-intensive method of validating transactions, called “proof-of-stake,” investors and regulators may realize that the energy-intensive method that Bitcoin has been using, called “proof-of-work,” was never really necessary.
McDonald said that the “climate crisis” and Bitcoin’s ‘massive use of energy’ is harmful. He said that, “Bitcoin doesn’t have the coordination like Ethereum to leave proof-of-work, it could be the first to be regulated away.”
Crypto’s energy consumption has become a major concern and a bone of contention for environmental activists and governments alike. McDonald added that Bitcoin will never see $69,000 again. Bitcoin (BTC) had traded close to that mark last November.
Ethereum’s upcoming upgrade, which is essentially a software update called “the Merge,” is expected to happen this month, a major advantage of this is that not as many computers will be required to keep the Blockchain going.
McDonald added that, ‘the possibility of Ethereum cutting energy costs by 99.95% is highly realistic.’
“When you’re moving from a system that is about generating as many random numbers as fast as possible with 10 million graphic processing units across the world, to a system that’s running on a few thousand computers that are pretty low energy, it’s going to make a huge difference.” Graphic processing units (GPUs) are used in cryptocurrency mining.
In order to track Ethereum’s energy movement, McDonald has created the Ethereum Emissions tracker, which takes a “bottom-up” approach. According to McDonald’s website, it doesn’t factor in Ethereum’s price or the price of electricity.
He said, “I’m starting with the hashrate, then looking at the hardware and making a technical argument for how much electricity must be used.”
McDonald points out one prominent risk, which is related to non-fungible tokens (NFTs). He said, “there’s a good chance some miners are going to switch to proof-of-work temporarily after the Merge happens.”
He added that there’s a possibility that even if the miners do switch, there could be duplicates of NFTs for a short period of time on another chain. So, if that happens, it could “potentially even dilute their values.”
The world’s largest NFT marketplace – OpenSea, said it would support only the proof-of-stake chain and added that it has been gearing up for the transition in order to make sure the process runs smoothly.
Why is the Upgradation Necessary?
Shockingly, a single Ethereum transaction can consume as much power as an average US household uses in more than a week. Bitcoin’s energy consumption is even worse!
The world’s largest cryptocurrency, Bitcoin, consumes an estimated 150 terawatt-hours of electricity annually, which is more than the entire country of Argentina with a population of 45 million. Producing that much energy emits around 65 megatons of carbon dioxide into the atmosphere annually, which is similar to the emissions of Greece, making crypto a significant contributor to global air pollution and climate change.