Wed. Aug 10th, 2022
Source: AdobeStock / chrupka

Energy consumption of Proof-of-Work (PoW) cryptoassets has once again become a hot topic as companies start ditching cryptos that use this energy-intensive mechanism for validating transactions and creating new tokens.

Last week, Mozilla, the company behind the Firefox browser, shared an update regarding its crypto donation policy following its “discussion about cryptocurrency’s environmental impact” with the community.

“Mozilla will no longer accept ‘proof-of-work’ cryptocurrencies, which are more energy intensive,” the company said following its review of PoW cryptos, adding that these cryptos can significantly increase their carbon footprint due to their energy-intensive nature.

On the other hand, the company said that it will resume accepting proof-of-stake (PoS) cryptoassets for donations.

“Mozilla will develop and share a list of cryptocurrencies we accept by the end of Q2 2022,” the company said.

Mozilla, which has been accepting crypto since 2014, published its climate commitments in early 2021, pledging to reduce its “emissions significantly and mitigate what we can’t avoid.” To honor its commitment, the company halted crypto donations earlier this year and started a review of digital assets.

The PoW mechanism is energy-intensive since it awards network participants, called miners, for spending computational power to solve puzzles and keep the network safe. The model incentivizes miners to bring more and more computational power to the network, consuming more energy.

According to Digiconomist, Bitcoin (BTC), the biggest PoW crypto, consumes 204.50 terawatt-hours (TWh) of energy per year, which is equivalent to the power consumption of Thailand. Moreover, a single Bitcoin transaction is calculated to spend 2181.06 kilowatt-hours (kWh), comparable to the power consumption of an average US household over 74.76 days.

In terms of carbon footprint, Bitcoin is predicted to release 114.06 Mt CO2 (megatonnes of CO2) or the same amount as that of the Czech Republic per year. One single Bitcoin transaction is calculated to have a carbon footprint of 1186.88 kgCO2, which is equivalent to the carbon footprint of 2.63m VISA transactions.

Citing these concerns, over 200 long-time Wikipedia editors have put forward a request asking the Wikimedia Foundation to stop all forms of crypto donations.

“Cryptocurrencies are extremely risky investments that have only been gaining popularity among retail investors,” wrote Wikipedia user GorillaWarfare, who is also the original author of the proposal. “I do not think we should be endorsing their use in this way.”

The proposal has received around 400 votes. Excluding new accounts and unregistered users, 232 have voted in support of the proposal while 94 voted against.

In a comment, the Wikimedia Foundation said they are aware of the request and are reviewing to put an end to their acceptance of crypto donations, which brought them around USD 130,000 last year.

“We are aware of the community’s request that the Foundation consider ending our acceptance of donations in cryptocurrency,” they said. “Our Fundraising team is reviewing the request and related discussions and we will provide additional information once they complete that process.”

Meanwhile, MicroStrategy CEO Michael Saylor argued that the total use of energy for Bitcoin mining is “inconsequential,” that the amount of energy Bitcoin is using makes up no more than “a rounding error” in other major industries, and that it is “negligible” when compared to total world energy usage.

According to digital asset investing firm CoinShares, the Bitcoin mining network contributed less than 0.08% to the world’s total carbon dioxide (CO2) emissions.

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