Recently, ESG emerges as a hot issue in companies. ESG stands for Environmental, Social, and Governance. To make a business sustainable, it is essential to consider an environmental, social, and governance structure.
Among them, the environment is one of the key themes for Industry 4.0. The core challenge of the Biden Administration in the U.S. is also the environment. By the way, digital assets have been criticized from the environmental aspect long before. For example, Bitcoin miners verify blocks, during which they have to mine blocks with mining equipment. It is the mining equipment that uses the inefficient waste of electricity, being criticized from the environmental aspect. According to China’s media Golden Finance, the annual energy consumption of the Bitcoin network is equal to the total energy consumption of all the data centers around the world. From this point of view, what critics say seems to make sense.
Mining Digital Assets Creates Profits While Taking Care of the Environment.
However, there are a lot of efforts to improve the inefficient systems of mining digital assets. Using energy only for mining could be inefficient, but the energy used not only for mining but also for other purposes could increase efficiency.
For example, the heat generated during mining can be used for heating. When you visit a large-scale mining site, you can feel the heat high enough that you do not need to turn on a heating system even in midwinter. It is said that those in some cold regions reduce heating costs by using the characteristics of the mining equipment. You can not only improve energy efficiency but also obtain profits from mining rewards.
A start-up called Heatmine was established for the purpose of distributing an energy-efficient mining system to each household. In the aftermath of the digital assets entering a bear market starting from 2018, the company was eventually put out of business, but there are still relevant ongoing attempts at the private level. Recently, there are cases of applying the heat miner systems not only to households but also to livestock facilities such as poultry farms. It is expected that there will be ongoing attempts to improve energy efficiency in the future.
A mistake to think that mining is the only way to verify blocks
Of course, the method of verifying digital assets is not only through mining. The industry calls the process to verify blocks through mining as Proof of Work (PoW). Bitcoin is a representative digital asset using the PoW.
However, a lot of digital assets tend to adopt different proof methods other than PoW these days. This is largely intended to lower the barrier to entry for verifying blocks, but some say that they have the purpose of considering environmental issues because it is true that mining itself consumes energy in some way.
Proof of Stake (PoS) as a recent favorite topic in Ethereum 2.0 is one of the representative alternatives to PoW. Ethereum 2.0 means a massive update to go from a PoW to a PoS consensus. Once the PoS is adopted, the blocks will be verified according to how many coins of the relevant project are held, instead of mining. This will brush aside the issue about energy consumption because this would not operate mining equipment. As such, the digital asset industry is developing its business while taking into account a variety of fields including the environment, not the simple token economy.
*This research and analysis document has been prepared for the purpose of providing information that can be used as a reference based on our reliable data and information, but we cannot guarantee its accuracy or completeness.
*The document has reflected the individual’s opinion, and it may not be consistent with the company’s official point of view.