Crypto Mining: Separating Fact from Fiction
Since the beginning of this year, the total market capitalization of all cryptocurrencies has nearly doubled in size; the total value locked in DeFi projects has more than tripled. By some estimates, the number of cryptocurrency users around the globe has surpassed 100 million for the first time. It’s fair to say that crypto has entered the mainstream of political and economic discourse in a way that it hadn’t before. Perhaps not surprisingly, this surge in interest, activity and asset values brought with it increased scrutiny from governments, regulators, and the media.
A key focus of this scrutiny has been mining — specifically, the energy required to run the large operations that mint the world’s bitcoin and other cryptocurrencies. A particular area of focus has been China, where most of the world’s mining takes place — often using cheap energy produced by high-emission coal-fired power plants.
It’s true that crypto mining uses a lot of energy. But the narrative that this is a fatal flaw for blockchain technology misses a few key facts and trends that are already pointing to a more sustainable and renewable future for the technology.
All cryptocurrencies are not created equal when it comes to energy consumption
Currently, the world’s two largest blockchain networks — Bitcoin and Ethereum — operate PoW consensus for their respective networks and the environmental impact is enormous. There have been many attempts to offset the impact of power consumption through renewable energy, yet none of those solutions alone is enough to touch the root of the problem: most of the hashing power is wasted. Only one block is included in the chain, and the remaining orphan and uncle blocks are discarded along with the energy used to form them.
Conflux Network’s approach is simple: all mined blocks are used to secure the network — no discarded blocks means less wasted energy. Reducing operating costs is crucial for long term miner sustainability, and network security. For its part, the Conflux network is 650x more efficient than Bitcoin. The original blockchain can only process an average of 4.6 transactions per second; Conflux processes 3,000 transactions per second while using only a fraction of the energy that bitcoin uses.
Miners working to expand renewable sources
Another misconception is that miners don’t care about the environment. The truth is that cryptocurrency miners recognize that a shift to renewable energy is not only essential for the future of their own industry, but for the planet itself.
Indeed, many of the world’s largest cryptocurrency firms are leading the charge in sustainable mining practices (and sustainable energy development more broadly). For example, publicly-traded crypto firm Argo Blockchain uses almost 100% renewable hydropower in its Quebec facilities. The company is also building a firm in West Texas, where 90% of electricity will come from wind and solar power.
In addition to firms like Argo, nine of the world’s largest crypto companies recently joined forces to form the Bitcoin Mining Council. The Council recognizes that a shift to renewable energy is essential for the long-term survival of crypto and the planet. Therefore, it is working to advocate for sustainable mining practices and to increase transparency in the mining industry.
Some leaders of the crypto space have even pointed out that this advocacy work could quicken the global shift to renewable energy in general. Brett Winton, director of research at ARK Invest, recently wrote that “a world with Bitcoin is a world that, at equilibrium, generates more electricity from renewable carbon-free sources.” In other words, this is a moment of opportunity for governments to work with crypto miners and entrepreneurs to build the infrastructure needed for widespread adoption of sustainable energy sources.
Conflux Mining Community
Following mainnet launch last year, Conflux has seen tremendous growth in the number of nodes and mining farms in the US and EU, and currently has over 900 nodes across 26 countries. Mining Conflux has proven to be highly profitable — consistently named as a top 15 coin to mine — and in some cases has been more profitable than mining Ethereum. This has contributed to a large number of independent miners, which currently outnumber mining pools in our ecosystem.
Our mining community is actively testing and integrating renewable mining solutions. With so many independent miners, it is an easier switch to introduce renewable energy sources into their operations. Conflux independent miners in the U.S, the Netherlands, Turkey, China, and other locations globally are testing solar power, installing panels or building entirely new facilities with solar panel roofing. In China, several independent miners have made the switch to hydropower. We view all of this as positive steps in the right direction, and are proud of our mining communities for taking action.
Sustainability & financial inclusion
Finally, it is worth remembering that for smaller cryptocurrency miners, block rewards constitute an essential source of income. In 2017, thousands of Venezuelan citizens relied on income from crypto mining for survival amid that country’s continuing economic crisis. Then as now, many of these smaller miners did not have the option of relying on sustainably produced electricity. But as crypto industry leaders continue to advocate for renewable power sources, smaller miners can and should be included in this sustainability revolution.
In the meantime, smaller miners who wish to reduce the carbon footprint of their mining activities can support energy-efficient cryptocurrencies such as Conflux. Because Conflux’s energy consumption is relatively minor, mining CFX can be environmentally ethical even when renewable energy is not available. In this way, the Conflux network is working to foster financial inclusion while taking as little toll on the environment as possible.