How do we move into the future if we don’t fix the problems that hold us back? Bitcoin forever changed the financial and tech worlds. It has the potential to make huge shifts by introducing DeFi (decentralized finance).
Yet mining bitcoin (as well as other cryptocurrencies) uses the same amount of energy in an entire year that powers entire countries. Crypto naysayers find this to be incredibly irresponsible and wasteful, only adding to ethical and security concerns.
Rapid digital advances seem to produce such large carbon footprints. Will this reverse the efforts of governments and organizations going green? To identify underlying issues, we first need to investigate the root causes.
In this article, we’ll discuss just how much energy gets consumed because of bitcoin along with why that is. Scroll down to answer these questions and more.
The Impact of Bitcoin’s Energy Consumption
Crypto mining runs on massive CPUs that are constantly working 24/7. Computers designed expressly for this purpose run many, sometimes thousands, of GPUs. These are also called “graphic cards.”
The process of crypto mining, or more specifically bitcoin mining, describes the verification of new transactions. Users race to solve the highly complex mathematical problem to win bitcoins.
This creates a hash that gets added to a public ledger where it gets confirmed as a completed transaction. Hash denotes the 64-digit decimal number that results from a large math problem.
Furthermore, miners can work from anywhere in the world at any given moment. Because of the competition to verify a new block, which gets produced roughly every ten minutes, hundreds of computers work all at once.
Each miner makes more than one attempt to discover the correct value for the block. This block value gets called the “nonce.”
Exactly What Is Happening
The nonce refers to the 32-bit-sized field that consists of a value that miners constantly work to adjust. The goal becomes making the block value either less than or equal to the target value.
Miners send new values that get computed until someone comes up with the best value. That means hundreds of calculations happen all at once, and these computations require power.
How Much Energy Does This Actually Use
This article in Quartz demonstrates the amount of power used by Bitcoin by visualizing the number of single AA batteries that amount of power would need.
For example, one AA alkaline battery produces .0026 kWh of electricity. To power one entire day of bitcoin mining, you would need enough batteries to fill one large ship with 24,000 ship cargoes worth of batteries.
That adds up to 219,724,877 kWh of power. For an entire year, you would need the amount of electricity generated by 385 of those cargo ships. That means you’d require 84,594,077,568 kWh of electricity.
Consequently, the problem lies not in the amount of power that Bitcoin generates. This will only continue to increase as cryptocurrency becomes more and more widespread. It’s because most electricity around the world comes from fossil fuels. Some countries, like the US, also use coal power.
Renewable energy sources can power Bitcoin mining CPUs as well. However, the amount of renewable energy used to generate electricity for bitcoin amounts to just over 25% of total electrical output.
All this depends on where miners source their power from. Countries like China produce a large amount of hydropower, especially plentiful during certain seasons of the year when there’s heavy rainfall.
You can check out how much power gets generated by Bitcoin by going to the Cambridge Bitcoin Electricity Consumption Index, also called CBECI. Here you can view current rates while comparing them against historical trends in electrical output. The CBECI updates every day.
Counterarguments Against the Energy Consumption Claim
Some people take issue with the claims that bitcoin mining causes great harm to the environment. Their objections lay mainly with the most popular way to measure electricity output. The most popular metric used is the “energy per transaction.”
Bitcoin supporters claim that these figures manipulate the narrative by exaggerating how much power gets used, suggesting that comparing the amount of energy per transaction to amounts of electricity used in US households or entire countries leads to hyperbole.
According to an article published by Bitcoin Magazine, not enough attention gets focused on the level of electrical output from traditional financial institutions. They argue that DeFi removes an entire step of verifying currency. Comparing the carbon footprints of both banks and crypto in comparison to each other tells a more complete story.
Bitcoin doesn’t require a final layer of verification from a centralized authority. In the traditional financial sector, they call this layer the “real-time gross settlement,” also called RTGS.
The article also goes on to suggest stacking how crypto mining measures against the output from military-backed RTGS. Military and federal systems also have large carbon footprints.
Is Going Green with Bitcoin Possible
The most intuitive solution to this problem would be a greater reliance on renewable energy sources. Thus, cryptocurrencies can move away from dependence on fossil fuels based on geography. They can work towards increasing mining operations in places that don’t use a lot of fossil fuels.
The largest localizations of bitcoin mining currently happen in the US. A lot of mining also comes from Kazakhstan.
As it currently stands, power gets generated to produce “proof of work” to verify each new block. Newer verification methods produce less power, including:
- Proof of stake
- Proof of burn
- Proof of capacity
Proof of stake in particular has risen as one of the more popular alternative methods. It runs on already existing bitcoins that users already own.
For this to work, they put up certain amounts of bitcoin to create validation nodes. Those get used to verify new blocks in the blockchain.
Nevertheless, it cannot yet be definitively concluded that power usage from bitcoin mining will go down or become more sustainable. Especially since bitcoin remains the largest cryptocurrency and will only continue to grow.
The Dilemma of Using Bitcoin
We already produce large amounts of electricity that power our computers and other smart devices. It’s impossible to not be fully implicated in the damages created by fossil fuels. Going green takes more than fixes at the individual level.
Governments and large corporations remain responsible for how power gets sources for electrical grids. This includes centralized banks.
Check out our website to read more about trends in technology and personal development.
How to Make the Most of Your Workday
How to Increase Happiness: 11 Effective Ways
One Comment
Comments are closed.
[…] are many people who are concerned about how much energy cryptocurrencies such as Bitcoin consume but keep in mind that there are other […]