Bitcoin Mining Just Got Easier: For Bitcoin enthusiasts, first, the good news. It is reported that mining difficulty for the world’s largest, and most valuable, cryptocurrency just dropped by more than a fourth. This means it is now easier and more profitable to mine Bitcoins. However, if one scratched beneath the surface, it would become evident that the easing off in mining difficulty is a move that is linked ultimately to the high environmental cost that the activity was seen as extracting. Authorities in China, which accounted for as much as 65 percent of the global production of Bitcoins last year, have cracked down on mining after it became evident that miners were using up massive amounts of energy. But what makes Bitcoin mining a concern for ecologists? Here’s what you need to know.
What Is Cryptocurrency Mining?
What makes Bitcoin unique is that it is nothing like existing currencies in either the way it is built or how it functions. For starters, while it is called Bitcoin, it is neither a coin nor any kind of paper money but just lines of computer code. While conventional coins and notes are either struck or printed at a mint, Bitcoins are created through a function integral to how the network itself operates.
Bitcoin and other cryptocurrencies are what are known as decentralized money. That is, they are not controlled by a central bank like, say, the Reserve Bank of India, which decides the monetary policy for the country. The RBI gives directions to banks on everything from liquidity to interest rates and the banks, in turn, execute the directives and also keep a track of the money you keep with them. When you withdraw cash or spend money via cards or digitally, the bank makes a note of it and accordingly adjusts your balance. The people you transact with don’t get to know how much money you have in the bank as long as the transaction is smoothly done.
Transactions via Bitcoin are undergirded by blockchain technology and are tracked via the distributed ledger system. That is, all transactions on the Bitcoin network are visible to every computer that is a part of the network and there is no central authority or bank that tracks the movement of the cryptocurrency. How these transactions are verified and recorded lies at the heart of the blockchain and how Bitcoin is mined.