The value of Bitcoin has skyrocketed over the past year, putting past price spikes to shame. A single Bitcoin is now worth more than $ 11,000, but the drive to accumulate Bitcoins has also driven energy consumption to mind-boggling levels. Mining Bitcoin now consumes more than 30 terawatt-hours of power globally, which is higher than the individual energy usage of 159 countries.
According to Bitcoin analysis blog Digiconomist, energy consumed by Bitcoin mining now exceeds what is used by countries like Ireland, Hungary, Oman, and Lebanon. Bitcoin uses about as much power as the entire country of Morocco and slightly less than Bulgaria. If Bitcoin were a country, it would have the 61st highest energy consumption. However, this only covers miners. It does not include any power consumed by Bitcoin-enabled devices like vending machines and ATMs.
Unlike a fiat currency like the US dollar or Euro, Bitcoin needs to be “mined.” Of course, no one is digging digital currency out of the ground like gold — mining Bitcoin is just the process of running complicated calculations on computers. These calculations keep the Bitcoin network operational by verifying transactions on the Blockchain, which is the public ledger of all Bitcoin activity.
Bitcoins are awarded to systems that complete these calculations, but the complexity of the calculations increases over time. This is a basic element of the Bitcoin protocol, but it’s resulted in vastly higher energy usage as people scramble to earn more of the cryptocurrency. A few years ago when a Bitcoin was worth several dollars, you could perform calculations on a laptop CPU and earn a few coins. However, now there are massive server farms with Application Specific Integrated Circuit (ASIC) hardware precision tuned to crunch numbers for the Blockchain.
The cost of this hardware is high, but so is the cost of keeping it running. That’s why many Bitcoin mining operations are based in countries with lower energy rates. A study from the University of Cambridge earlier this year estimated that 58 percent of Bitcoin mining took place in China. That means much of the energy fueling Bitcoin comes from “dirty” sources like coal. While it’s possible mining hardware will become more efficient, the calculations for Bitcoin transactions will only become more complex.
As long as Bitcoin value keeps increasing, so too will the amount of energy going to verifying transactions. Meanwhile, other cryptocurrencies like Etherium and SafeCoin are on the rise. That means more CPUs and GPUs churning away in server rooms, even if Bitcoin drops in value.
Let’s block ads! (Why?)