The notion that cryptocurrency is better than the typical fiat currency may have taken a knock, especially with the recent discovery that Bitcoin is estimated to consume more electricity annually than The Netherlands, United Arab Emirates or Argentina.
According to an analysis by Cambridge University, the Bitcoin network consumes around 121.36 terawatt-hours (TWh) a year. In addition, Digiconomist estimates that the energy footprint of a single Bitcoin transaction is equivalent to 453,000 payments on the Visa network.
For better visualisation of just how much power it consumes, Cambridge University said that if Bitcoin were a country, it would be among the top 30 energy users worldwide.
This is because Bitcoin ‘miners’ require a complex system of computers armed with powerful GPUs to solve ‘puzzles’ inside the cryptocurrency network, which, in turn, also requires a tremendous amount of electricity to function.
The Cambridge researchers believe that unless the value of the currency goes down, the energy consumption will more than likely increase further. However, Bitcoin is still on the rise as many supporters of Bitcoin are still arguing that cryptocurrency is still a better option than government-issued money, with its decentralised system, digital nature and security.
In fact, Tesla invested US$1.5 billion in Bitcoin recently – quite contrary to its mission in reducing the carbon footprint through electric cars. This decision caused the price of Bitcoin to rise rapidly shortly after, by about US$48,000.
This rising price of Bitcoin means higher revenues to miners, who will then invest in more machines that will consume more power and release more carbon to the atmosphere – adversely affecting the environment.
Such worries come from the fact that most Bitcoin mining facilities are located in China, which is still heavily reliant on coal-based power. In a statement from the BBC, David Gerard, author of Attack of the 50 Foot Blockchain, said, “Bitcoin is literally anti-efficient. So more efficient mining hardware won’t help – it’ll just be competing against other efficient mining hardware”.
Meaning, Bitcoin is substantially power-consuming by design. Unless its price goes down, the amount of energy used will only be reduced by decreasing the number of miners in operation or if the network changes the way it works.
Currently, Bitcoin uses the Proof of Work approach, which requires all of its miners to attempt to solve a complex problem and the first one to find a solution will be given a reward. In simple terms, the more powerful your machine, the more likely you are going to “win”.
This is why Bitcoin is so power-consuming, as there is a lot of energy wasted. To overcome this, other cryptocurrencies, such as the second largest Ethereum, are now planning to utilise the Proof of Stake design, where instead of consuming energy to answer puzzles, a miner is limited to mining a percentage of transactions that is reflective of their ownership stake.
For instance, a miner who owns 3% of the Bitcoin available can theoretically mine only 3% of the blocks.
Despite all these efforts, we are still very behind in terms of energy resources compared to the computing needed today. To really solve the problem in cryptocurrencies, or any other technologies requiring electricity for that matter, is to go to its roots – investing in a cheaper and more extensive use of renewable energy sources.
Archive
- October 2024(44)
- September 2024(94)
- August 2024(100)
- July 2024(99)
- June 2024(126)
- May 2024(155)
- April 2024(123)
- March 2024(112)
- February 2024(109)
- January 2024(95)
- December 2023(56)
- November 2023(86)
- October 2023(97)
- September 2023(89)
- August 2023(101)
- July 2023(104)
- June 2023(113)
- May 2023(103)
- April 2023(93)
- March 2023(129)
- February 2023(77)
- January 2023(91)
- December 2022(90)
- November 2022(125)
- October 2022(117)
- September 2022(137)
- August 2022(119)
- July 2022(99)
- June 2022(128)
- May 2022(112)
- April 2022(108)
- March 2022(121)
- February 2022(93)
- January 2022(110)
- December 2021(92)
- November 2021(107)
- October 2021(101)
- September 2021(81)
- August 2021(74)
- July 2021(78)
- June 2021(92)
- May 2021(67)
- April 2021(79)
- March 2021(79)
- February 2021(58)
- January 2021(55)
- December 2020(56)
- November 2020(59)
- October 2020(78)
- September 2020(72)
- August 2020(64)
- July 2020(71)
- June 2020(74)
- May 2020(50)
- April 2020(71)
- March 2020(71)
- February 2020(58)
- January 2020(62)
- December 2019(57)
- November 2019(64)
- October 2019(25)
- September 2019(24)
- August 2019(14)
- July 2019(23)
- June 2019(54)
- May 2019(82)
- April 2019(76)
- March 2019(71)
- February 2019(67)
- January 2019(75)
- December 2018(44)
- November 2018(47)
- October 2018(74)
- September 2018(54)
- August 2018(61)
- July 2018(72)
- June 2018(62)
- May 2018(62)
- April 2018(73)
- March 2018(76)
- February 2018(8)
- January 2018(7)
- December 2017(6)
- November 2017(8)
- October 2017(3)
- September 2017(4)
- August 2017(4)
- July 2017(2)
- June 2017(5)
- May 2017(6)
- April 2017(11)
- March 2017(8)
- February 2017(16)
- January 2017(10)
- December 2016(12)
- November 2016(20)
- October 2016(7)
- September 2016(102)
- August 2016(168)
- July 2016(141)
- June 2016(149)
- May 2016(117)
- April 2016(59)
- March 2016(85)
- February 2016(153)
- December 2015(150)