Bitcoin consumes more energy annually than the entirety of Greece, Israel and Bangladesh. Each transaction on the network consumes approximately 28,150,000% more energy than a VISA transaction, and its carbon footprint is equal to that of one million transatlantic flights. If cryptocurrency is to be the future of money, it first needs to solve its energy problem.
This results from the way Bitcoin is mined. Using a Proof of Work system, transactions on the blockchain are processed by miners, who offer up processing power in order to confirm transactions on the network. This provides safety by ensuring that transactions are verified, therefore maintaining the trustworthiness of the blockchain.
In order to generate this processing power, the blockchain sets increasing difficult algorithmic puzzles for computer systems to crack. Mining systems then fight to solve the puzzle, using increasingly high amounts of energy as they do so.
Not only is Bitcoin leaving its mark on the environment, but the profitability of mining bitcoin is also falling. Miners are forced to shell out on expensive equipment and high electricity bills to stand any chance of profiting from Bitcoin.
PIVX, a new cryptocurrency, believes it has the answer.
PIVX: An eco-friendly cryptocurrency
PIVX, which stands for Private, Instant, Verified Transaction, is a new cryptocurrency based on the Bitcoin code that builds on the technology to solve its issues with scalability and real-world application, including its high energy use.
To achieve this, its creators have ditched Bitcoin’s Proof of Work algorithm in favour of a Proof of Stake method. The method allows users to ‘stake’ on the PIVX blockchain without the necessity of costly hardware.
Stakers essentially put down a deposit on blocks rather than fight for them, with the algorithm then deciding whether to accept their bid, which significantly reduces the amount of energy used.
According to PIVX’s creators, the entire network, which has the same number of nodes as the Bitcoin network, could be powered by a single wind turbine.
The company’s vision of a stake-driven cryptocurrency future is shared by Ethereum founder Vitalik Buterin, who previously said that “Blockchains of the future with proof of stake and sharding will be thousands of times more efficient”.
PIVX believes that its changes will also help to solve Bitcoin’s other issues, such as scalability. Bitcoin users have had to deal with increasing transaction fees and slow processing times since the network became more crowded during its 2017 peak. Bitcoin transactions now take more than 10 minutes to confirm on average, but PIVX promises to cut that down to less than 60 seconds.