Environmentally friendly coins continue to soar, days after Elon Musk redirected the crypto market’s focus to the environment.
Polygon (MATIC) rose by 30% in the past 24 hours and 116% in the past week, data from CoinMarketCap shows. MATIC’s current price is $1.63, down from an all-time high of $1.82 just hours ago, and the coin now has a market cap of $10.1 billion.
Cardano (ADA), the proof-of-stake coin spearheaded by Charles Hoskinson, increased by 15% in the past 24 hours and 32% in the past week. ADA peaked at its own record price of $2.18 today; it is now worth $2.16 and has a market cap of $68 billion.
Both of these coins employ a proof-of-stake consensus algorithm to validate transactions. It’s a greener alternative to Bitcoin’s energy-hungry proof-of-work algorithm.
In proof-of-work algorithms, miners race to solve complex mathematical puzzles. And since these puzzles are of ever-increasing difficulty, miners need to run ever more powerful computers, churning through hardware and electricity at an unprecedented clip. As a reward, the network issues miners with a newly-minted coin.
By contrast, proof-of-stake algorithms allow those with the largest number of coins to validate transactions.
The Bitcoin mining industry, much of which relies on cheap fossil fuels, uses a similar amount of electricity as the Netherlands, according to data from Digiconomist, a site run by Dutch central banker and data scientist Alex de Vries.
Defenders of the mining industry argue that the damage the proof-of-work mining industry exacts is worth it; it is great at securing decentralized networks and invaluable to those who require censor-resistant technologies.
Nor is it that bad, they claim: Bitcoin mining can put stranded natural gas to work. Plus, much of the industry relies on renewable energy; Chinese Bitcoin miners spend much of the year harvesting surplus hydroelectricity from Sichuan.
Yet, Mr. Musk, once a champion of Bitcoin, is no longer in their corner. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel," he tweeted Wednesday.
The Tesla and SpaceX CEO won’t sell any more of the billions of dollars in Bitcoin that Tesla bought in January until “mining transitions to more sustainable energy.”
And Musk’s kicker—possibly the one that wiped $10,000 from Bitcoin’s price and added a fat wad to the market caps of proof-of-stake coins? “We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”