Bitcoin has attracted a great deal of criticism over recent years due to its sky-high energy demands—something that’s expected to grow if the bitcoin price climbs further.
The bitcoin price is up around 500% over the last 12 months, despite fears of a “major” 50% correction wiping almost $500 billion from the combined bitcoin and cryptocurrency market capitalization over the last week.
Now, as bitcoin’s biggest crypto competitors prepare for upgrades that developers are hoping will vastly improve speed and efficiency, the cofounder and executive chairman of cryptocurrency company Ripple has proposed bitcoin follow ethereum in transitioning to a more eco-friendly model.
“I would argue that such a change is critically important for bitcoin to remain the world’s dominant cryptocurrency,” Ripple’s Chris Larsen wrote in a Medium post this week.
Bitcoin currently uses a system called proof-of-work, with so-called “miners” using huge amounts of computing power to secure the bitcoin blockchain. The miners are rewarded for their work with newly-created bitcoin tokens and paid fees for validating bitcoin transactions.
Late last year, ethereum, the second-largest cryptocurrency by value after bitcoin, began a long-awaited upgrade to ethereum 2.0 that will see the network’s current transaction fee and mining model overhauled. Ethereum’s proof-of-stake model will see “validators” replace miners and users sending fees to the network itself that will be removed from circulation.
Meanwhile, Ripple’s XRP, a top-five cryptocurrency that’s designed for use by the financial services sector to improve cross-border transactions, has been using a model called federated consensus to validate transactions and secure its ledger for much of the last decade.
“I know this is a bold proposal, but it is worth a serious discussion given what the world looks like today (in comparison to when bitcoin was launched in 2009),” Larson wrote, pointing to bitcoin’s average energy demands of “132 TWh a year (equivalent to roughly 12 million U.S. homes)” and “releasing an estimated 63 million tons of CO2 annually.”
Larson said that bitcoin developers should seriously consider upgrading bitcoin and warned “many of bitcoin’s most prominent advocates turn a blind eye or even ‘greenwash’ the problem with questionable claims.”
Meanwhile, bitcoin’s eye-watering energy use has begun to attract attention. Billionaire philanthropist Bill Gates recently warned bitcoin was “not a great climate thing” while U.S. Treasury Secretary Janet Yellen has called bitcoin’s energy use “staggering.”
However, bitcoin proponents have largely dismissed criticism of bitcoin’s energy use even amid evidence that suggests bitcoin is using significantly more electricity since its latest bull run began in October.
Last month, cryptocurrency investor Nic Carter hit back at claims bitcoin mining could contribute to environmental disasters.
“I believe bitcoin will be mined almost exclusively with nonrival energy,” Carter wrote in a Medium post, arguing bitcoin miners are incentivized to seek out cheap, renewable forms of energy.
“Suffice to say, there’s enough nonviral energy out there to run bitcoin many times over. It’s just a matter of deploying hashrate in the right locations, which miners are doing—aggressively.”