While Bitcoin and much of the crypto market collapsed last week, some of the more energy-efficient proof-of-stake coins were flying high
Elon Musk contributed to even more FUD (Fear, Uncertainty and Doubt) on the crypto market by last week, announcedthat Tesla will no longer accept Bitcoin payments due to concerns about the use of fossil fuels in Bitcoin mining and transactions.
These concerns have existed since the introduction of Bitcoin and have their permission. 65% of the Bitcoin hashrate comes from China, where about 78% of energy consumption was covered by fossil fuels in 2019.
Bitcoin mining is estimated to still consume less energy than physical bank branches in the US. However, this fact has not helped the cryptocurrency’s price: in the two hours after Musk’s tweet, Bitcoin has fallen by almost 16%.
Over the weekend, Bitcoin continued to fall, reaching a low of $ 43,825 on Sunday, which also affected much of the rest of the crypto market. Some coins, however, defied the downward trend.
Bitcoin is based on a proof-of-work consensus mechanism. However, proof-of-stake cryptocurrencies consume significantly less energy. Some of them reached new all-time highs (AZHs) at the weekend.
One of the biggest winners among the leading cryptocurrencies was Polygon (MATIC) last week with an increase of 78 %. On Saturday, the price reached a new AZH of 1.89 US dollars. Polygon is an Ethereum scaling platform secured by a proof-of-stake mechanism, whose recent growth has probably been supported by the migrations of various projects from Ethereum to Polygon. Ethereum is and remains a proof-of-work blockchain.
Cardano (ADA) also performed well, rising 30% in the past week to reach its current AZH of $ 2.47 on Sunday. Cardano is backed by Ouroboros proof-of-stake protocol, which is said to be four times more energy efficient than Bitcoin. In a direct Embassy to Elon Musk, the Cardano Foundation highlighted its similarities with Tesla on Twitter last week.
Kusama (KSM) also bucked the trend, rising 13% on Friday before hitting an AZH of $ 618.36 on Saturday. Kusama is the live test network for Polkadot (which also achieved a new AZH on Saturday) and therefore inherits its renowned proof-of-stake mechanism. The recent rally may have been driven by the upcoming introduction of Kusama parachains. KSM tokens will have to vote on which projects should get a place on them. There is also less KSM on the open market, as more than half of the token offering is staggered.
With the growing environmental awareness of the population, the energy efficiency of proof-of-stake blockchains-as well as their often lower transaction fees – could further boost demand for proof – of-stake cryptocurrencies in the future.