The issue of Bitcoin mining has become a hot topic in the cryptocurrency industry in recent years, causing significant controversy. The energy-intensive process involved in the proof-of-work (PoW) consensus algorithm has raised environmental concerns and triggered governments worldwide, including China, Kosovo, and Kazakhstan, to ban Bitcoin mining. So, if you are planning to trade or mine Bitcoin, then you may click to visit Immediate Edge, a recommended trading platform online.
Meanwhile, Ethereum, which is the closest rival to Bitcoin, has been considering a shift to the proof-of-stake (PoS) mechanism for several years and is expected to abandon proof-of-work (PoW) entirely in 2023. Could Bitcoin Embrace Proof-of-Stake or Is Proof-of-Work Here to Stay as the Dominant Consensus Mechanism for the World's Leading Cryptocurrency?
Why Has Bitcoin Been Reluctant to Shift to Proof of Stake Despite Ethereum's Successful Transition?
In the previous year, Ethereum took a significant step towards environmental sustainability by adopting a proof-of-stake consensus mechanism. This particular energy-efficient framework allows for the smooth inclusion of blocks of transactions, NFTs as well as other details on the blockchain. In September, Ethereum completed the upgrade, dubbed "the Merge," and witnessed a drastic reduction of 99% in direct energy consumption.
However, Bitcoin, on the other hand, continues to consume a substantial amount of energy, equivalent to the entire nation of the Philippines, without any considerable progress towards sustainable energy usage. The process of Bitcoin mining, which involves complex computations for creating and maintaining new coins, has raised significant concerns worldwide. Following China's crackdown in mid-2021, miners have been scouring other parts of the world with cheap but not necessarily clean energy sources.
This has led to increased pressure on power grids in places like Kazakhstan, where coal-fired power stations are the main energy source, resulting in localized blackouts and triggering civil unrest. In upstate New York, abandoned factories and warehouses were converted into mining facilities, causing complaints from locals about high energy bills and the constant whirring of data centre fans, adding to concerns about the environmental impact of Bitcoin mining. Currently, the US accounts for 38% of global Bitcoin mining operations.
Politics at Play
In theory, a handful of individuals could steer Bitcoin towards a proof-of-stake mechanism since it operates as an open-source project, where community participation is welcomed. The truth is nonetheless, a few designers known as "maintainers" are sponsored by prestigious businesses such as Blockstream, a Bitcoin startup. The biggest cryptocurrency marketplace within the US will be Coinbase. The MIT Digital Currency Initiative, a study project headed by the MIT Media Lab, has ultimate state regarding any alterations to Bitcoin's code. Despite being an open-source project, the power dynamic lies with this core team, leaving the community with limited influence over significant changes to Bitcoin's protocol.
Although the possibility of switching to a different system, such as Ethereum, remains open to these maintainers, their cautious disposition has prevented them from taking such a step. Since Bitcoin was the pioneer of proof-of-work cryptocurrencies, its conservative approach towards tweaking the code has resulted in the preservation of its original vision from 2009 to this day, with only minor updates being made over time.
Wrapping up
According to Emin Gun Sirer, the visionary creator of Avalanche, a formidable rival to Ethereum, there exists a sense of trepidation among Bitcoin purists when it comes to embracing radical changes. In an interview with MIT Technology Review, Sirer posits that this fear stems from a reluctance to take on any risks and a concern that such changes may erode the unwavering trust in the algorithmic restrictions that govern Bitcoin. These restrictions encompass fundamental features such as the maximum cap of 21 million bitcoins that can ever be mined, a fixed parameter established at the inception of Bitcoin.