Yes, some cryptocurrencies, such as bitcoins, require a lot of energy to operate. However, technological improvements are beginning to solve this issue. The ‘proof of work’ or PoW validation mechanism, which is widely employed for cryptocurrency mining, is inefficient in terms of energy consumption. Instead, a low-energy technology known as ‘proof of stake,’ or PoS, is becoming more popular. Ethereum, the second-largest cryptocurrency in the world, is in the process of switching from a PoW to a PoS validation mechanism.
Furthermore, miners need inexpensive power since they won’t be able to continue mining if the cost of electricity surpasses the profit they get from selling bitcoins. As a result, many bitcoin miners opt for renewable-energy-based power, which is often less expensive than coal-based electricity. For example, Cambridge University research revealed that renewable energy sources account for approximately 39% of the total energy utilized by cryptocurrencies such as Bitcoin, Ethereum, Bitcoin Cash, and others.
In Iceland, cryptocurrency mining is nearly entirely powered by renewable energy. This helps to mitigate bitcoin mining’s negative environmental impact.