On Earth day, Chris Larsen in a blog post argued why he thinks Bitcoin needs to reconsider Proof-of-Work when validating transactions. As the oldest and the world’s most dominant crypto asset, its core technology remains largely unchanged.
The world is changing and there is an increasing need for renewable energy and more energy-efficient uses. Though financially revolutionary, Bitcoin has long been one of the highest power consumers. A recent study revealed that Bitcoin consumes more power than some countries, in light of this, Ripple co-founder Chris Larsen has pointed out that the Proof-of-Work (PoW) is no longer pertinent. The billionaire points out that this was also a concern for Hal Finney, one of the earliest Bitcoin adopters and only one of a few people who had contact with Satoshi Nakamoto the creator of Bitcoin.
In a blog post, Larsen pointed out several key issues with PoW. Primarily, CO2 emissions and consumption of energy. In recent years, miners have been switching to renewable sources of energy. Some have also argued that Bitcoin uses ‘trapped energy,’ energy that would have otherwise gone to waste. But as the co-founder notes, this is only part of the solution.
Should Bitcoin Re-consider PoW?
He draws a comparison to Ethereum which is currently in the process of switching from PoW to a new validation process referred to as Proof-of-Stake (PoS). Other major players that have already implemented this include Binance coin (BNB) with a market cap of over $80 billion. This is proven to be more energy-efficient and successfully adopted by 43% of the cryptocurrencies in the market.
But Larsen points out this is not the only solution and Bitcoin has. Another option could be Federated Consensus which is used on the XRP Ledger. In fact, the solution could be ‘something yet to be developed’.
“I would argue that such a change is critically important for Bitcoin to remain the world’s dominant cryptocurrency. PoW’s current energy demands and carbon footprint are already unsustainably high, with Bitcoin alone consuming an average of 132 TWh a year (equivalent to roughly 12 million U.S. homes), and releasing an estimated 63 million tons of CO2 annually”, added he.
As Bitcoin continues to surge, energy consumption and CO2 will continue to rise, this should at least raise a concern to companies like Tesla who want to invest in the financial evolution and reduce the impact on climate change. “Consider Tesla’s recent investment in bitcoin, which resulted in an over $5,000 per bitcoin price increase. Incredibly, this almost certainly wiped out Tesla’s entire fleet’s annual CO2 savings,” wrote Larsen.
The co-founder’s comments are timely for institutions, miners, developers and even retail developers to get the community talking as the world celebrates world earth day.
Kiguru is a fine writer with a preference for innovation, finance, and the convergence of the two. A firm adherent to the groundbreaking capability of cryptographic forms of money and the blockchain. When not in his office, he is tuned in to Nas, Eminem, and The Beatles.