Could this be the year that cryptocurrencies literally become mainstream currency? It certainly seems so, as various cryptocurrencies have appreciated and hit all-time highs across the board.
In April, Bitcoin surpassed $ 64,000 (€ 52,700), while this month Ethereum surpassed the threshold of $ 4,000 (€ 3,300). Even Dogecoin – the altcoin meme launched to poke fun at the two mentioned above – has made headway.
But it is also difficult to keep up with the huge volume of cryptocurrencies that are being launched, the so-called altcoins (alternative cryptocurrencies) with more than 5,000 estimated in circulation at the time of publication of this note.
Despite their progress, cryptocurrencies such as Bitcoin and others like it are still considered risk investments due to their volatility, although the perception is changing. Its recent success has also increased scrutiny of its operation, especially with regard to energy-intensive practices such as mining.
But there is a cryptocurrency that is starting to be talked about for theoretically more positive reasons: Chia.
Chia, who started trading officially last week, tries to do things differently. On the one hand, it is classified as the “green” cryptocurrency, but what makes it green and how does it differ from other cryptocurrencies?
How is Chia different from Bitcoin?
As the original cryptocurrency – and to date, the most valued – Bitcoin has set the tone for the altcoins that have followed in its wake.
In this regard, many cryptocurrencies use a practice first adopted by Bitcoin to create new tokens called “mining.” Known as a “proof of work” (PoW) system, mining requires the use of computers to solve complex mathematical puzzles in order to unlock new Bitcoin tokens.
This is the first major difference with Chia, who uses instead what is called a “space-time test” system. What does this imply? To “cultivate” Chia – which avoids the term mining – a large number of empty hard drives are needed to house “plots” to which a number of blocks are allocated based on the available space.
Chia’s creator Bram Cohen, who founded the BitTorrent file-sharing platform, believes that this method is more reliable, secure, and environmentally friendly than cryptocurrencies like Bitcoin.
The claim that it is more environmentally friendly is attracting the most attention.
How eco-friendly are Chia’s credentials?
The mining process requires both equipment – made up of specialized computer processors – and access to large amounts of energy.
The rise in popularity of Bitcoin has made domestic miners unable to match the output of large-scale mining operations, especially when it comes to exorbitant energy bills.
In addition to excluding small players, the colossal energy consumption required by mining is having an indelible impact on the planet in the form of emissions.
Investors in Bitcoin note that the cryptocurrency is increasingly dependent on renewable energy sources, but due to the cost of electricity, the concentration of mines is often shifted around the world in search of lower energy prices.
Most of the time, the cheapest sources of electricity are generated by coal-fired power plants and not by wind turbines.
In China, where most of the world’s Bitcoin mines are located, the process will create as many carbon emissions in one year as Italy and Saudi Arabia combined in 2024, plus there are situations like localized power outages that occurred last month. .
Iran is also positioning itself in the mining market.
Since it does not use mining, Chia has been praised for potentially opening a new profitable avenue for home users, as well as providing a more environmentally friendly alternative to energy-intensive Bitcoin.
At least at first glance, Chia lives up to its green credentials, as it doesn’t need to consume large amounts of electricity. However, the means by which Chia farmers mint new tokens is not without criticism, nor is it without environmental cost.
Why is the cryptocurrency Chía criticized?
Even before its release on commercial platforms in early May, Chia had already been the subject of controversy after its initial success sparked a hard drive buying race.
Increased demand has already led to shortages and skyrocketing prices in China and other parts of Asia. Since Chia’s launch was announced in February, 12-terabyte disk prices have soared 59% in China alone, according to the South China Morning Post.
The reason for the increase in demand is not just the sudden popularity of a newly launched cryptocurrency, although this largely explains it. It is also due to the fact that Chia cultivation is incredibly wasteful when it comes to the necessary hardware. It does not need large amounts of energy, nor a great power in the graphics card, like other cryptocurrencies, but it is lethal for storage units, hard drives.
According to recent reports from China, the continued cultivation of Chia is causing the lifespan of a 512GB SSD hard drive, for example, to drop to just 40 days instead of the usual lifespan of around a decade.
The specialized sites point out that the storage units are not designed for such an intensive workload as the “cultivation” of Chia and the storage of its plots requires.
The result is the voiding of all warranties on used hard drives and the potential for huge mountains of discarded and useless electronics. Electronic waste is a growing danger as consumers rush to send their electronic devices to landfills to upgrade to newer models.
Electronic waste often contains toxic components, such as heavy metals such as lead and lithium, which, if improperly disposed of, run the risk of polluting the environment and posing a risk to human health. They are one of the great environmental problems of our time.
At the moment, low energy costs are sufficient incentive to keep Chia’s star on the rise, but the true environmental impact that this perhaps not-so-green cryptocurrency will have is still uncertain.