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Proof-of-stake coins are exploding. While other sectors may face “green premiums,” the cryptocurrency industry is embracing environmentally friendly technology as a result of Elon Musk’s firm prodding.
Environmentally friendly coins continue to soar, only days after Elon Musk shifted the crypto market’s focus to the environment.
Polygon (MATIC) has increased by 30% in the last 24 hours and by 116% in the last week, according to CoinMarketCap reports. MATIC is now trading at $1.63, down from an all-time high of $1.82 just hours earlier, and the coin has a market capitalisation of $10.1 billion.
To verify transactions, each of these coins use a proof-of-stake consensus algorithm. It is a more environmentally friendly solution to Bitcoin’s energy-intensive proof-of-work algorithm.
Miners compete to solve complicated mathematical puzzles in proof-of-work algorithms. And, since these puzzles are becoming more complex, miners must operate ever more powerful machines, consuming hardware and energy at an alarming rate. The network rewards miners with a freshly minted coin as a reward.
Proof-of-stake algorithms, on the other hand, enable those with the most coins to verify transactions.
According to data from Digiconomist, a platform operated by Dutch central banker and data scientist Alex de Vries, the Bitcoin mining industry, which depends heavily on inexpensive fossil fuels, consumes about the same amount of energy as the Netherlands.
Defenders of the mining industry contend that the harm done by the mining industry is worthwhile; it is excellent at protecting decentralised networks and is indispensable to all who need censor-resistant technology.
They also argue that Bitcoin mining will bring stranded natural gas to use. Furthermore, much of the industry is reliant on clean energy; Chinese Bitcoin miners spend the majority of the year mining excess hydroelectricity from Sichuan.
Mr. Musk, who was once a supporter of Bitcoin, is no longer on their side. “We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, particularly coal, which has the highest emissions of any fuel,” he said in a tweet on Wednesday.
Tesla and SpaceX CEO Elon Musk has confirmed that he would not sell any of the billions of dollars in Bitcoin that Tesla purchased in January before “mining transitions to more sustainable energy.”
And Musk’s clincher—possibly the one that wiped $10,000 off Bitcoin’s valuation and added a sizable chunk to the market capitalizations of proof-of-stake coins? “We are also investigating other cryptocurrencies that use 1% of Bitcoin’s energy/transaction.”