Bitcoin issuance requires mining, which is detrimental to the environment due to the consumption of huge amounts of electricity. But there are "eco-friendly" coins that can be mined without mining farms. Which ones would be the most promising to make money from?
Climate change is a concern for many governments. Government agencies are imposing increasingly stringent measures to put the economy on a green track. Giving up carbon fuels and switching to alternative energy will have an impact on various types of assets. Therefore, cryptocurrency without mining, i.e. coins that can be "mined" in other ways, looks most attractive in 2022.
The trend towards greenness
According to the forecasts of analysts, the sphere of digital assets will strongly depend on the decisions of government agencies related to environmental protection. Bitcoin mining requires the use of huge computing resources that consume megawatts of electricity. Therefore, the trend in the coming months and years will be to switch to other assets that are "greener" to the environment.
Not so long ago the BTC rate went up sharply only after Elon Musk announced the possibility of paying for the purchase of Tesla cars with this cryptocurrency. But later he abandoned his decision, explaining it by the non-polluting nature of the coin's production.
Nevertheless, 2021 can be considered a successful year for owners of the coin. At the end of December it was given for just over 48 thousand dollars, that is almost 70% more than the year before. At the middle of March 2022 the bitcoin exchange rate is at $42,800 according to bitcoin 360 ai. But the peculiarity is that the analysis of green cryptocurrency rates shows that they have risen even more in percentage terms. Market analysis shows that the uptrend will continue.
What is cryptocurrency without mining
Let's understand in more detail how non-green currencies (bitcoin, ethereum) differ from "green" versions of virtual money. To do this, it is necessary to understand the principle of the blockchain protocol.
There are two main variants.
- PoW or "proof of work". BTC, ETH and many others are based on it. The blockchain is built by solving complex mathematical problems to form a hash and attach the next block. Whoever did it faster gets rewarded.
- PoS or "proof of stake." It is used, for example, by cryptocurrencies XLM, SOL, ADA and ETH after switching to version 2 of the protocol. New blocks are joined and validated at the expense of tokens that are already stored in users' wallets (they do not disappear). Consequently, there is no need to calculate anything, which greatly reduces the power consumption.
Thus, the PoS protocol leaves a significantly smaller carbon footprint when it is used.
Let's focus on which cryptocurrencies without mining are the most promising.
Ethereum version 2
Right now the Ethereum blockchain runs on the PoW consensus, as does the mining. But work is already underway to move it to an improved version 2 protocol. It will speed up transactions on the network and allow smart contracts to run more efficiently. But most importantly, it uses the PoS mechanism to form "chain" blocks.
An important factor that influenced the dynamics was the forthcoming transition to the second version protocol, which will turn Ethereum into a "green" cryptocurrency.
Stellar (XLM) is another non-mining cryptocurrency that can yield high returns. At the middle of March 2022, the XLM token, which functions on the Stellar blockchain, was worth $0.2, and the crypto had a total capitalization of about $5.1 billion. Thanks to this, the coin is in the 31nd position in the world ranking and is not going to lose its position.
Blockchain Stellar was launched in 2014 after a fork of Ripple. The system is managed by the nonprofit organization Stellar Development Foundation. Within the network, it is possible to exchange fiat currencies into digital currencies and vice versa. A special feature of the protocol is that the token functioning within the network increases the efficiency of trading by reducing carbon dioxide emissions in the atmosphere.
Within Stellar, you can create your own tokens and use them within private ecosystems. That is, blockchain can be used as a tool for new green projects, such as investing in environmental startups.
There is no PoW or PoS consensus in the Stellar blockchain. Decentralized nodes of a special type are used to chain and validate blocks, which compute new blocks. The platform is open source, so everyone can verify the transparency of transactions. Thanks to this approach, the validation cycle is less expensive, reducing transaction time and power consumption.
Cardano is a blockchain that can be seen as an improved version of the ethereum protocol. Within the blockchain, the ADA token is used as the unit of account. The advantages of this system are:
- greater flexibility;
- operation of smart contracts;
- ability to deploy DeFi;
- stable and sustainable operation.
Cardano refers to environmentally friendly cryptocurrencies, as there is no need to use mining to form blocks. Validation is done using PoS consensus.
What's the bottom line
Ethereum on version 2 protocol, ADA, XLM are cryptocurrencies without mining. Blockchains of these coins require much less energy consumption to function. Therefore, they are quite promising and can be considered as an object for investment. However, it should be remembered that crypto is a very volatile asset. Therefore, there is always a risk of losing invested capital.