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Is there a way in which cryptocurrencies can become more environmentally friendly? Cryptocurrencies have been a trending topic for many years, but as their popularity has grown, so have the concerns about their environmental impact. In this blog, we will deep-dive into a possible solution to overcome these environmental issues – “anti-mining cryptocurrencies”- and discover their exciting possibilities!
What is Anti-Mining Meaning in Crypto?
In traditional cryptocurrencies like Bitcoin, miners compete to solve complex math puzzles to verify transactions and add new blocks to the blockchain. Miners who solve these puzzles successfully are rewarded with new coins as a prize for their hard work.
On the other hand, the term “anti-mining” is used to define cryptocurrencies that are immune or withstand mining. In such coins, a protocol ensures that mining tools like ASIC machines and GPUs cannot be used to mine coins. These cryptocurrencies use other ways to verify transactions and add new blocks to the blockchain, which have been discussed in detail later in this blog.
History of Anti-Mining
Anti-mining cryptocurrencies first came into existence in 2012 with the launch of Peercoin, which implemented a Proof of Stake consensus mechanism in place of the traditional Proof of Work. It required users to hold (stake) a certain amount of Peercoins to verify transactions and add new blocks to the blockchain. This made the blockchain highly energy-efficient and accessible, encouraging more people to participate in the validation process.
Due to Peercoin’s success, many anti-mining cryptocurrencies, such as Nxt and Blackcoin, have emerged, each implementing its unique consensus mechanism. For example, Nxt developed Proof of Stake Time (PoST), which rewards users who hold their cryptocurrency for an extended period.
Environmental Impact of Cryptocurrency Mining
Energy Consumption
Mining cryptocurrencies results in high energy consumption, leading to a considerable rise in greenhouse gas emissions over the years. For instance, Bitcoin alone is responsible for more carbon pollution than the whole country of New Zealand. Further, as of December 2022, it was estimated that 0.1% of all greenhouse gas pollution in the world was caused by Bitcoin mining.
Air pollution
Air pollution from coal-fired power plants used for mining is also a harmful impact on the environment. For instance, in 2014, a private equity company bought the Greenidge coal plant and turned it into a fracked gas plant for crypto mining. By the end of 2020, the plant had been open for 343 days, putting out as much pollution as 44,500 cars.
E-waste
Electronic waste from Bitcoin mining technology that only lasts a few years is another cause of concern every year. For instance, bitcoin mining makes around 30.7 kilotons of e-waste, enough to cover Luxembourg’s electronic waste five times over.
Anti-Mining Mechanisms in Cryptocurrencies
As explained earlier, anti-mining cryptocurrencies use alternative mechanisms to verify transactions and add new blocks to the blockchain. Here are some common anti-mining mechanisms:
Proof of Stake (PoS)
In PoS, users must hold a certain amount of cryptocurrency in their wallets as collateral to validate transactions and create new blocks. Validators are chosen randomly from this “pool of stakers” and rewarded with transaction fees and newly created cryptocurrency for validating transactions and building new blocks.
Proof of Capacity (PoC)
This mechanism utilizes hard drive space instead of computational power to validate transactions and create new blocks. Users allocate hard drive space to store data and generate plots, which are used to determine the block creator and reward them with block rewards. The more hard-drive space users allocate, the greater their chances of being selected.
Proof of Authority (PoA)
This mechanism is used in a few private blockchains prioritizing participants’ trust. Instead of competing miners, PoA relies on a group of authorized validators selected based on their standing and integrity within the community. It is relatively fast and efficient since it avoids energy-intensive mining activities. It is ideal for private blockchains where participants are already known and trusted, including enterprise and government applications. VeChain is a notable example of a blockchain project that uses PoA.
In today’s world, the PoS consensus mechanism is the most popular one among the blockchains. Although several other consensus mechanisms are beyond those mentioned above, they are less prevalent in cryptocurrency.
Regulatory Challenges in Anti-Mining
- Legal Status: Few jurisdictions view anti-mining cryptocurrencies as securities, while few view them as currencies or commodities. This ambiguity regarding the legal status of these coins results in a lack of uniformity in regulatory classification. It makes it difficult for companies and investors to navigate the legal landscape by complying with local regulations.
- Enforcement of KYC: Since the anti-mining cryptocurrencies operate outside the traditional banking system, it is difficult for regulators to enforce KYC regulations. Due to this reason, these coins are viewed as a threat to the financial system.
- General supervision: Regulators find it challenging to oversee anti-mining cryptocurrencies because of their unique consensus mechanisms. For instance, in a Proof of Stake (PoS) network, there needs to be more clarity on how regulators can supervise the block validator selection and ensure they are not engaging in illegal activities.
Implications of Anti-Mining for Miners
- No need for specialized equipment: Anti-mining cryptocurrencies have eliminated the need for expensive specialized mining equipment. Miners can participate in the network validation process differently depending on the consensus mechanism.
- Reduced revenue streams: Anti-mining has resulted in reduced revenue streams for miners. Since introducing new consensus mechanisms, individuals who rely solely on mining as a source of revenue stream have witnessed a decline in their earnings.
- Market demand: There has been a significant shift in market demand since the introduction of anti-mining cryptocurrencies. As more investors shift from PoW to PoS, miners would need to adapt to the changing landscape or risk being left behind.
Conclusion
To conclude, anti-mining cryptocurrencies might have emerged recently. However, their demand has grown over the years since they don’t require energy-intensive mining, which helps them tackle the environmental issues arising from popular cryptocurrencies like Bitcoin. These cryptocurrencies employ different ways of validating transactions and don’t require any special equipment. However, some regulatory issues related to their usage impact their adoption in the long run. It will be interesting to see how these new types of cryptocurrencies will do compared to the traditional ones.
