Bitcoin, the first cryptocurrency ever released, had quite an interesting development process. Since its market inclusion, Bitcoin has had many ups and downs, making it highly volatile. At the same time, the cryptocurrency remained steady, and the demand increased, which was an advantage for investors.
Bitcoin was designed to provide a platform for daily digital transactions. Although it started with a price of zero in 2009, now you can buy bitcoin with debit card, credit card, and even a bank deposit, as the asset has become valuable for one’s portfolio revenue. As the years went by, the cryptocurrency’s price was influenced by certain factors, such as supply and demand, new bitcoin securities, and competition.
Besides this cryptocurrency’s advantages, Bitcoin has one major issue that makes it harder to own it: mining. The difficulty rate has increased considerably in the past years, and now it takes about ten minutes to find a block, while the energy consumption is immense.
Let’s see what the expected course of Bitcoin is.
What Happens to Bitcoin Mining?
As of recent statements, Bitcoin’s network difficulty has increased considerably since the beginning of 2023. Experts estimate this challenge will reach a new high of over 3% in the next few days. At the same time, Bitcoin miners have struggled with mining at low BTC spot prices, which, compared to the high production cost, might lead to a significant number of miners ceasing their mining operations and stopping participating in mining pools.
The main problem of the network is that without mining, no more new bitcoins would be released into circulation. Therefore, miners must sacrifice some of their resources for the ecosystem to continue working. With no miners, Bitcoin would still be active as a network, but it would be left without new coins.
To mine productively, individuals need to invest in expensive computer equipment, such as a graphics processing unit (GPU) and an ASIC (application-specific integrated circuit), of which price usually starts from $500 and can reach up to tens of thousands of dollars. Nowadays, mining already requires considerable financial investments to be able to get high returns.
Is Bitcoin Mining Environmentally Unsustainable?
As Bitcoin mining becomes more and more challenging, another issue arises sustainability concerns. Recent reports show that Bitcoin is not going towards a greener approach but is instead more damaging the climate through the complex and energy-wasting mining process.
And as Bitcoin’s mining electricity usually comes from fossil fuels, like coal and natural gas, the increasing amounts of carbon emissions and pollution contribute to a weaker environment.
Bitcoin is among the cryptocurrencies that still use the PoW (proof-of-work) consensus mechanism, which is one of the most damaging. At the same time, this technology has been long ago surpassed by PoS (proof-of-stake), which many other cryptocurrencies have approached.
Ethereum, for example, has recently switched to PoS to minimize its carbon footprint impact. The results were entirely satisfactory, as Ethereum’s energy consumption was reduced by more than 99.988%.
Another green method that Ethereum is currently approaching is ReFi (regenerative finance), an increasing blockchain community. On this network, developers build ReFi applications that use DeFi (decentralized finance) elements to impact the environment positively.
The Environmental Impacts of Cryptocurrency Mining
Bitcoin is not the only cryptocurrency that negatively affects the environment, although the percentage of its contribution is considerable. Ethereum, Bitcoin Cash, Litecoin, and Cardano are known to be the least sustainable cryptocurrencies out there.
In the US, for example, Bitcoin mining consumed as much electricity as the states of Maine, New Hampshire, Vermont, and Rhode Island in 2021. Although it seems harmful, these high energy consumption stats led to strains of energy grinds, raised retail electricity rates, and boosted carbon emissions and local air pollution.
Electricity for mining is procured in a few ways. Miners purchase power plants, have agreements with power generators from a local utility, or are burning gas at oil and gas wells. All these methods impact the environment and will become unnecessary in the future if things don’t change.
On the other hand, some of the greenest coins include the following:
- Chia (XCH) uses the greenest consensus mechanism, Proof-of-Space-and-Time;
- Polygon (MATIC) is one of the best altcoins that offset carbon footprint;
- IMPT (IMPT) obtains and trades carbon through funding eco-friendly projects;
- C+Charge (CCHG) incentivizes ownership by offering drivers carbon credits when recharging their green cars;
How Will Bitcoin Mining Change in the Future?
It’s not expected that Bitcoin mining will get easier or less costly in the future. And that’s mainly because Bitcoin is close to its maximum supply of 21 million bitcoins; currently, 19 million of them have been minted already, leaving investors with few coins until the end of Bitcoin.
However, some experts state that Bitcoin will reach an end around 2140. When this happens, it’s more likely that mining fees will disappear. In this situation, miners will earn income through transaction processing fees rather than leveraging block rewards.
As the years will pass by, Bitcoin mining will become even more difficult than it is now. Although this might be a good thing, too, because as more miners verify cryptocurrency transactions, the network becomes safer, so Bitcoin will be less likely to suffer a breach in the system.
However, as the decline of the hash rate and the fall of Bitcoin’s price impact the network, fewer people will mine Bitcoins, mostly the ones who have done it for a while and have maintained a good position in regard to the market instability. New miners might not have the same luck, as they’d have to invest considerable financial resources into hardware applications to receive high returns.
Final Thoughts
As Bitcoin is closer to reaching its maximum coin supply, the hash rate and price decrease, indicating an unfavorable period for the cryptocurrency. Miners are the most affected in this situation because some of them stop mining due to expensive hardware requirements, while fewer new miners are contributing to the network. This raises sustainability concerns as mining is more complicated than ever.
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