This is not another article bashing bitcoin. Rather an exploration on how its energy is consumed. The sudden interest in a decentralized currency simply reflects society’s dissatisfaction with the status quo—and we are all for that. Blockchain technology (what bitcoin is supported on) is the future—this is exactly what governments fear: power to the people.
what is bitcoin mining?
There will only ever be 21M bitcoins. In order to mine a bitcoin a computer must solve a complex math problem. When bitcoin first began in 2009 this math problem could be cracked on a normal computer. However, the currency is designed so that as less bitcoins remain, the more complicated the math problems become. Now that 18.5 million bitcoins have been mined, more data procesesors are needed to mine one bitcoin.
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The University of Cambridge Centre for Alternative Finance (CCAF), which runs the bitcoin electricity use index calculated that bitcoin now uses 129.22 terawatt hours of electricity a year.
The CCAF’s result does not take into consideration bitcoin’s current energy mix, thus cannot determine a carbon footprint.
“The more machines a miner operates, the more likely he is to find the solution to the puzzle. However, more machines also means that more electricity is needed to run and cool the equipment, which in turn results in higher costs for the miner in question. Miners are thus always searching for abundant electricity sources at the lowest possible price.”— the CCAF explained.
who is doing the mining?
Anyone can mine bitcoins, and pretty much everyone is trying. Seeing as mining a bitcoin is a matter of luck and processing power, many people are mining bitcoin even though they might not solve the math problem before someone else…one might argue that this is wasted energy.
Currently, the majority are mined in China, where many miners seeking cheap electricity sources, mostly in Inner Mongolia (the biggest bitcoin mining region). China, as you know, has pledged carbon neutrality by 2060, so bitcoin mining with coal in this region has already had a governmental backlach—coal power sations have been mandated to close by 2022. Hopefully, as China pushes towards renewable energy, so will its miners.
Learn more about China’s pledge
what happens once the bitcoin is mined? Does it still use electricity?
Technically the bitcoin algorithm becomes more complex with time, meaning it can take up to 140 years for the last bitcoin to be mined. However, as the algorithms become more complex this means more processing power is needed. An already mined bitcoin eventually uses a minimal amount of energy compared to how much is used to mine it. So eventually (in 140 years time) probably around 90% less energy will be required to mine or use bitcoin.
Not all coins are created equal.
Ethereum is already working on an algorithm that would require less energy. Filecoin only requires a computer and some hard drives to mine. So, perhaps crypto will move towards more energy-conscious coins instead of bitcoin? How about coins that protect forests or the oceans as you buy them?
check out forest coin