Forget Bitcoin: Dogecoin, Ethereum, and Cardano Have Lower Mining Costs!

Will higher mining prices drive Bitcoin and Ethereum lower? Is it time to consider cryptocurrencies such as Cardano and Dogecoin instead?

Diagonal chain made of zeros and ones. Cryptocurrency and mining.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

The cryptocurrency markets have taken a beating after Elon Musk tweeted about Bitcoin’s high mining costs. The price of one Bitcoin has fallen by 30% at the time of writing. Comparatively, Ethereum, which is the second-largest cryptocurrency in terms of market cap, is also down 25% from all-time highs.

Musk had tweeted, “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. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.”

In early 2021, Musk announced Tesla bought $1.5 billion worth of Bitcoin, and it will use the digital currency as a mode of payment. Last week, the mercurial CEO asked his Twitter followers if the company should accept Dogecoin as payments instead. In a regulatory filing, Tesla also disclosed it sold 10% of its Bitcoin holdings.

Does this mean Tesla will now look at other cryptocurrencies as a mode of payment for its vehicles? Let’s take a look at a few of them that have a lower mining cost compared to Bitcoin.

Ethereum consumes 62.56 kilowatt hours per transaction

Bitcoin uses 707 kilowatt hours (kwh) per transaction. Comparatively, this figure for Ethereum is 62.56. The cryptocurrencies with the lowest kwh per transaction are as follows:

  • Ripple: Known as the real-time gross settlement system, Ripple is basically a currency exchange and remittance network. It has gained popularity with banks and several financial institutions, which has increased its market cap to $54 billion. Ripple uses just 0.0079 kwh per transaction.
  • Dogecoin: Created as a meme currency, Dogecoin is now the fifth-largest digital currency in the world with a market cap of $62.2 billion. This crypto is up a staggering 24,000% in the past year. Dogecoin uses 0.12 kwh per transaction
  • Cardano: A little-known cryptocurrency, Cardano consumes 0.5479 kwh per transaction. It’s a proof-of-stake (PoS) blockchain platform that operates on its network called ADA, which can be used for direct value transfer. This cryptocurrency aims to resolve issues that face blockchain adoption that include interoperability and scalability via the development of design principles. 

Cardano is a PoS blockchain, which means it uses a fraction of the mining power compared to proof of work blockchains such as Bitcoin. In the last week, Cardano has gained over 20% in market cap and is now the fourth-largest digital currency. 

Recently, Revuto, a start-up that operates in the blockchain space, concluded a $1.7 million private round to deliver subscription payments on Cardano. It is the first decentralized application to launch on the Cardano blockchain and is likely to demonstrate Revuto’s network ability to support high transaction volumes at a low cost. Multiple blockchain investors participated in the round which was led by BlackDragon VC.

The Foolish takeaway

While the prices of Bitcoin have fallen rapidly in the last week, volatility is something that has always been associated with cryptocurrencies. The massive influx of institutional investments in the crypto space is expected to drive widespread adoption of this asset class in the upcoming decade.

If you are a Canadian investor looking to enter this highly disruptive space, you can purchase ETFs such as Purpose Bitcoin ETF and CI Galaxy Ethereum ETF; they will give you exposure to the two largest cryptocurrencies in the world. However, it is advisable to invest as much as you can afford to lose due to the lack of regulation and tremendous volatility surrounding this space.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla and Twitter. The Motley Fool owns shares of and recommends Tesla and Twitter. Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.

More on Tech Stocks

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »

Shopping card with boxes labelled REITs, ETFs, Bonds, Stocks
Tech Stocks

TFSA Investors: 3 TSX Stocks You’ll Regret Not Buying on the Dip

Among wide range of investments allowed in a TFSA, now is the time to invest in stocks.

Read more »

Tired or stressed businessman sitting on the walkway in panic digital stock market financial background
Tech Stocks

2 Stocks That Lost Over 50% in 2022

The recovery of the TSX’s tech superstar and a promising high-growth stock that lost more than 50% in 2022 is…

Read more »

Man holding magnifying glass over a document
Tech Stocks

Why BlackBerry Stock Looks Way Too Undervalued After Q1 Earnings

BB stock hasn’t seen any appreciation lately, despite its continued progress on the IVY platform and early signs of the…

Read more »

A stock price graph showing declines
Tech Stocks

BlackBerry Q1 Earnings: The Declining Revenue Streak Continues!

Will BB stock break below $6?

Read more »