Environmental Policies for Green Cryptocurrency Mining

Environmental Policies for Green Cryptocurrency Mining

Volkan Oğhan (Istanbul University, Turkey)
Copyright: © 2022 |Pages: 11
DOI: 10.4018/978-1-7998-9083-6.ch013
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Abstract

Cryptocurrencies have appeared as a decentralized virtual currency where all users can contribute to the system and special encryption technology is used. Technologies from which cryptocurrencies originate are also promising technologies. Cryptocurrency mining, one of these technologies, provides a consensus algorithm that ensures the processing and security of the unique ledger. However, this algorithm requires a large amount of processing power for proof of operation, resulting in high levels of electricity consumption. The heat generated by cryptocurrency mining and the carbon emission due to high electricity consumption from fossil fuels will harm national and global efforts on the environment. In this respect, it may be possible to introduce various solutions and suggestions, including government intervention and technological changes in cryptocurrency mining.
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Introduction To Cryptocurrency

Cryptocurrencies have emerged as a virtual currency that does not have a central server or service provider, and that any user can provide resources and contributions to the authority mechanism, and includes a special encryption technology. Cryptocurrencies, in fact, are designed as an online exchange instrument in terms of solving various payment problems, considering them as an alternative to fiat money as in all other types of digital currencies. However, the technologies developed by cryptocurrencies, do not enable these currencies to bring solutions and innovations in financial technology and various other fields (health, defence, environment, governance, etc.) apart from the medium of exchange.

Cryptocurrency, Bitcoin, coin and token expressions can often be used interchangeably because they are in the same technological system. Despite that, these concepts are different from each other in cryptocurrency terminology. Cryptocurrency is a general expression that contains all currencies in the this system. The currencies in this system can be categorized as two different types of cryptocurrency which are coins and tokens. Cryptocurrencies, which are a natural product of original blockchain technologies in the cryptocurrency system, are expressed as coins. Coin types are classified as Bitcoin and alternative coins (altcoins).

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