Proof-of-Work (PoW) cryptocurrency arises from mining. The most prominent Proof-of-Work is Bitcoin, where miners take their time and deploy their computers to calculate exhaustive mathematical problems. Miners who can solve mathematical problems get a reward for the cryptocurrency mined. For instance, miners engaged in mining Bitcoin get a reward of Bitcoin.
PoW is a decentralized algorithm that enables coherent transactions in the network and equilibrium on the blockchain across the network nodes. The algorithm encompasses cracking mathematical problems that use a lot of electricity. People involved in the exercise of computations are crypto miners.
How Proof-of-Work works
The computation of mathematical problems in Proof-of-Work comes to a conclusion when all the network participants have reached a consensus. Miners play the most important role in building a blockchain. In this case, they must confirm that the new block has the requisite features before addition. Machines mining cryptocurrencies differ in capacities; for instance, mining smaller coins are easy, and consumer-grade CPUs can operate. Mining bigger coins require the expert to use ASIC mining hardware.
Benefits of PoW
PoW is beneficial because it allows the decentralization of a public register that gives storage to the network security, transaction data and mineable coins. Access to rewards in Proof-of-Work is open to anyone with the right hardware, compared to Proof-of-Stake, which distributes rewards based on the share of coins.
Disadvantages of Proof-of-Work
Coins produced through PoW contain limited scalability; thus, processing them becomes limited. Coins originating from a less computing power environment become prone to attacks since an entity controls about 50% of the hash rate in the network. Bitcoin and Ethereum coins do not face such an issue; it only faces smaller coins.
Energy consumption by Proof-of-Work
Generation of Proof-of-Work (PoW) coins requires a large amount of energy because cryptocurrency mining consumes a large proportion of energy. The network size determines the amount of energy used. In this case, a large network size calls for more energy. Bitcoin has the largest network, thus consuming the most energy, followed by Ethereum.
Top 4 PoW coins consuming less energy
Dogecoin (DOGE)
The coming of Dogecoin to the market happened as a joke. Tesla and SpaceX CEO Elon Musk was among the first to advocate for the coin. According to Elon Musk, Dogecoin (DOGE) is an alternative to Bitcoin because it consumes less power than its competitors.
In May 2021, Musk suspended receiving payment in the form of Bitcoin and advocated for DOGE. He liaised with the creators of DOGE to improve energy efficiency and brand the coin more viable in the crypto industry.
Dogecoin uses PoW consensus, which is highly energy efficient compared with other coins in the green crypto milieu. The energy consumed per transaction in Dogecoin is about 0.12 kWh, which is relatively low compared to others. The developers continue to look for other ways in which the consumption can go further down to conserve the environment. Influential people like Tesla CEO Elon Musk have committed resources to ensure that Dogecoin cements its place among the environmentally friendly coins.
Nano (NANO)
Nano takes the lead in the crypto networks consuming the least energy. The coin uses about 0.000112 kWh per transaction, just a fraction of other cryptocurrencies, such as Bitcoin. Nano utilizes its block-lattice technology, which makes its PoW system reduce energy consumption.
NANO could become the most environmentally friendly because of its efficient decentralized network and attracting less energy expenditure.
Astute investors and experts have indicated optimism toward the rise of Nano in the coming years. The price of Nano is currently at $5, but many predict it will quadruple in the next three years. Any investor with energy-friendly crypto must take Nano as the best option.
Litecoin (LTC)
Litecoin (LTC) came to the crypto market in 2011 and has sustained its efforts toward becoming efficient. Although its consumption per transaction is 18.52 kWh, Litecoin consumes less than Bitcoin. It is more efficient than Bitcoin because it contains a faster block generation proportion that adopts the PoW system with a script, thus ensuring the privacy and security of transactions made by investors and users.
Litecoin is an alternative to Bitcoin because of its position in the crypto space. Bitcoin has a better energy-efficient system compared to Bitcoin. Its reputation in the crypto industry makes it considerable by investors yearning to make noteworthy returns. Its environmentally friendly levels rank low, but it is better than bitcoin in terms of energy consumption.
Ethereum 2.0 (ETH)
The crypto market appreciates the presence of Ethereum because it has revolutionized transactions. It is only second to Bitcoin, and its network continues to increase. Ethereum entered the crypto market in 2015, operating under the PoW model like Bitcoin. Mining Ethereum also requires a lot of energy, leading to higher transaction charges.
The large amount of energy used to mine Ethereum is becoming unattainable, thus necessitating the Ethereum Community to create an environmentally friendly platform, Ethereum 2.0. The upgrade will integrate a new form of operations that decentralizes the chains in the network to decongest the platform and make it energy friendly. The rollout of Ethereum 2.0 will lead to an increased rate of transactions.
Even if Eth2 might not reach the levels of green coins, it will drastically reduce the present rate of energy consumption. Its plans to reduce energy consumption and its position in the crypto space make it worthy of being on this list. Estimations from internal sources indicate that the coin will gain great efficiency in the market.
Parting shot
Integrating green energy in the crypto space is a brilliant idea for reducing the amount of power used to mint coins. The coins will lead to reducing environmental impacts that affect financial outlays. Creating new cryptocurrencies is a continuous process, thus creating room for innovators and other enthusiasts to create platforms that conserve the environment. Investors can invest in environmentally friendly projects compared to projects that exhaust the available resources. Therefore, every platform must design ways of ensuring PoW are efficient and effective.