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As Power Outages and Climate Change Policies Disrupt Energy Use, Cryptocurrency Mining Comes Under Fire
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Bitcoin and other popular cryptocurrencies face an uphill battle with regulators in several countries seeking to ban the mining of said currencies altogether. Regulators, politicians and business leaders are concerned about the high power consumption of cryptocurrency mining to create new tokens and verify transactions.
As a result, many countries have already banned mining and the use of cryptocurrencies. Unfortunately, more and more countries are also considering adding bans. As a result, Bitcoin prices fell 7% to $38,287, while Ether fell 8% to $2,809.50 overnight on January 20, 2022.
Gold-backed stablecoins performed very well. Given that the price of gold has remained considerably stable in 2022, Pax Gold and the ability to trade crypto for gold with Alpha Bullion provides an alternative inflation hedge and protects against cryptocurrency volatility.
Contents Pin up
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1. Is the EU considering banning proof-of-work mining?
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2. What is Proof of Work?
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3. Is there an alternative to proof of work that is considered more energy efficient?
- 4. Russia announces cryptocurrency ban
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5. Are there stable alternatives to cryptocurrencies?
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6. What are Pax Gold and Alpha Bullion?
Is the EU considering banning proof-of-work mining?
Erik Thedéen, Vice President of the European Securities and Markets Authority, expressed his concerns about the high energy consumption of Bitcoin mining for proof of work (PoW) and its effects on EU climate change objectives.
What is Proof of Work?
PoW is the primary method used by Bitcoin miners to verify Bitcoin transactions. The verification process uses sophisticated computers to calculate very complex mathematical problems. Miners compete to solve math problems and whoever completes the equations first is rewarded with Bitcoin.
PoW mining is energy-intensive and has sparked debate among many prominent figures like Elon Musk. Tesla recently dropped its Bitcoin payment option. However, Musk says that if Bitcoin had at least 50% of its energy consumption from renewable sources, he would reconsider using Bitcoin as a form of payment.
Is there an alternative to proof of work that is considered more energy efficient?
Instead, Thedean suggested that proof of stake (PoS) is a better alternative to PoW, citing that PoS is much more power efficient. PoS uses a consensus mechanism, which randomly selects miners to create new tokens and validate crypto transactions. Second, it requires the miner to “stake” a specific amount of cryptocurrency as collateral. Ultimately, the miner then validates the entries on the blockchain, where they will be stored securely.
The EU does not have a significant proportion of crypto miners. But the threat of a ban from the EU and other countries weighs heavily on the industry.
Russia announces cryptocurrency ban
Russia, which accounts for 11.23% of global Bitcoin mining, has announced plans to ban the use and mining of digital currencies. This would be a blow as Russia is the third largest Bitcoin mining host in the world. In a report titled ‘ Cryptocurrencies: trends, risks, measures ‘, the director of the financial stability department of the Bank of Russia mentions the volatility of cryptocurrencies and fraudulent use. Additionally, the report mentions how mining “creates an unproductive expenditure of electricity.” Analysts believe that the price of Bitcoin and other cryptocurrencies may suffer a huge loss if the cryptocurrency is banned in Russia.
Are there stable alternatives to cryptocurrencies?
Currently, many investors are looking for alternative investment vehicles like cryptocurrency to hedge against inflation. Many investors are still advocating investing in cryptocurrencies like Bitcoin, suggesting that prices will soon rebound to record highs. Moreover, these investors believe this may be the case, but are concerned that the volatility in cryptocurrency prices is too risky. Others look to precious metals Like gold and silver , as a safe long-term investment. But, if you want the best of both worlds, trading Pax Gold through Alpha Bullion might be the right choice for you.
What are Pax Gold and Alpha Bullion?
Pax Gold (PAXG) is a stablecoin backed by physical gold bullion. Each token has a value of 1 troy ounce of gold and is tradable. alpha bullion is an exchange that allows investors to easily redeem their gold using PAXG. Investors interested in digital currencies and gold have come to trust Alpha Bullion for its reliability and convenience.
Updated on January 21, 2022 at 4:25 p.m.
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