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Fears about energy consumption from cryptocurrency extraction were temporarily appeased by a shift in the value of cryptocoins, including bitcoin itself.
The world's most popular cryptocurrency was around $ 3,700 at the end of November, down nearly 55% from last year's value of $ 8,200 and more than 79% compared to the record of 17,900 dollars reached in December 2017.
Bitcoin transactions have remained at a fairly stable rate, between $ 5,000 and $ 7,000 since June, but have started to decline since mid-November. It lost nearly 41% in value between 13 and 26 November, causing panic among crypto investors.
"Bitcoin is in crisis," Bloomberg cried. "The behavior of the virtual currency since the beginning of the year does not just look like a bursting bubble; it looks more like an attacked currency. "
The other major cryptocoins are no better off. At the end of November, the second largest market in the worldblockchainThe currency, ethereum, fell about 78% from last year and 92% from its January high.
And bitcoin money, widely regarded as the main competitor of bitcoin, fell 89% from the previous year and 97% from the peak reached in December 2017. Bloomberg noted that the depreciation of coins since December last had erased about 700 billion dollars from cryptocurrency markets.
This is the same amount used to bail out US banks after the subprime mortgage crisis in 2008. Most of the fall in cryptocoin values occurred early this year, when Investors have panicked at the prospect of regulatory repression in key markets such as China. .
However, like Bitcoin, Ethereum and Bitcoin transactions have been relatively stable in recent months. The reason for the latest decline is unclear, although some observers have blamed the uncertainty of a planned division or a "hard range" for Bitcoin money to form a new currency.
Although further losses are bad news for investors, the crash of crypto could have a positive side in terms of global energy consumption. Crypto-currencies based on block chains traditionally relied on a process called "proof of work" for validating transactions and creating new currencies.
The proof of work relies on solving computation problems whose difficulty increases, as well as on the value of a cryptocoin, a process called extraction. In the case of Bitcoin, IT effort would require as much energy as a medium-sized country.
Concerns about Bitcoin's energy consumption have not diminished since the currency lost much of its value in early 2018, as the previous crypto-currency summit led to the creation of a multitude spare parts based on the blockchain.
Even in early November, an article from Nature claimed that cryptocurrency extraction for four popular parts – bitcoin, Ethereum, Litecoin and Monero – consumed more energy than actual extraction, for an equivalent market value.
"While the prices of parts in the market are quite volatile, the network has steady increases for three of the four cryptographic currencies, suggesting that energy needs will continue to rise," worried the authors.
There are signs that the last drop in cryptographic values may have changed the picture, however.
According to the Digiconomist Bitcoin Energy Consumption Index, created by Alex de Vries, data consultant and blockchain specialist PricewaterhouseCoopers, the energy consumption of bitcoin fell by about 27% in the last two weeks of November.
Cryptocurrency still uses more energy than Bangladesh, however.
Scott Clavenna, president of Greentech Media at Wood Mackenzie Power & Renewables, said the high energy consumption of bitcoin is not only a problem of sustainable development, but also a problem for those who dream of a truly decentralized currency.
"Mining is a classic double-edged sword," he said. "As a rewards-based approach to securing a network, it has proven effective in supporting the growth of bitcoin and other crypto-currencies, but it also resulted in two unfortunate results. "
As the price of bitcoin increases, the incentive to invest more in energy-intensive mining equipment also increases, he said.
As a result, the mining ecosystem has consolidated around actors who can afford massive mining operations or who are grouped into large mining basins.
"Today we have a bitcoin market that consumes enormous quantities of electricity at questionable value, without actually leading to a real decentralization of a financial system because of the consolidation of of the mining sector, "said Clavenna.
"The decline in the price of bitcoin can be considered positive in this respect. Reducing the profits of mining is the only way to reduce the overall electricity consumption of the network and could also have an impact on the consolidation. "
Jesse Morris, commercial director of the Blockchain platform, Energy Web Foundation, added, "It will be very interesting to see how the size and energy intensity of the bitcoin mining pool will be transformed."
Many miners will abandon the bitcoin network because the current price can not cover the cost of mining operations, he said. At the same time, however, with fewer participants in the Bitcoin mining pool, the difficulty of the algorithm should disappear.
"I'm not quite sure what will happen to net-net energy consumption, but it will be very interesting to see how many miners leave the market in this downturn," he said. Morris said.
"However, the work continues for companies that actually use blockchain and digital technologies to solve real-world problems."
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