Is it high time to Introspect about Bitcoin Energy Consumption?
Mar 02, 2018 Posted / 4595 Views
No matter how much we choose to ignore, we know that Bitcoin's energy consumption is considerable and it is a huge cause of worry. The statistics and figures give more headache. Well in November last year, the energy consumption for the entire Bitcoin network was higher than the whole power consumed by the Republic of Ireland. The Crypto's energy consumption is enormous, and the demand has just grown over the time.
It is estimated that the demand has now grown to over 42 TWh of electricity in a matter of a year. Now compare this data with the energy consumption in New Zealand, Hungary, and Peru. It is proportional to CO2 emissions of 20 megatonnes – or roughly 1m transatlantic flights.
Now think about all the data, and it can cause any government, any authority and any person who has suffered from the lack of energy resources a deep worry. However, if we introspect about the growth and development of cryptocurrencies and its mass adoption (the general reference point for any virtual currency lover), we should also be addressing about the environmental threats it can cause rather than just suspending the talks for decentralization epistles.
It is quite significant that we discuss this issues before we chalk out how it is going to reach the populace. We need to understand that energy consumption is embedded with Bitcoin core with the process called mining. As critics may call it- Bitcoin core is the competition to waste the highest amount of electricity in the name of completing quintillions of arithmetic calculations.
Now, if you comprehend the Bitcoin mining process, you will understand how it works. The more electricity you burn, the higher computing power you can develop which might help you to solve the mining equation faster and you win the prize of 12.5 bitcoins to solve the mathematical problem. So ultimately you win about $100,000 with all the transactions expenses paid in the preceding 10 minutes which adds extra $2, 500 or more.
However, only the winner takes all prize and no one else gets anything. Now understand this why, if you are a miner and you use excessive computing power, you have a higher chance of winning. But ultimately the price will go to only one person, which means that all the power consumed by other miners in order to compete is just wasted. Burning higher electricity enhances your chances of winning, but concurrently, it decreases others and so they have an urge to consume exceeding power in turn.
While we think about our profits, we forget the economic hazards, the mining can cause if not found with an alternative. Credit Suisse guidance note published on 27th February 2018 said, "the network as a whole will reinvest almost all the bitcoin paid out as mining rewards back into its electricity consumption."
According to the Credit Suisse’s ballpark figures, it is projected that 80% of the costs of bitcoin miners are wasted on electricity. Presently, if we compare the prices of electricity and bitcoin, the bank calculates a maximum profitable power draw of bitcoin at around 100TWh – two-and-a-half times higher than its current rate. Any higher and the miner will lose money.
If bitcoin were to become the global currency its supporters hope it will, its price would increase. We need to find green ways to mine cryptocurrency, otherwise, the governments will only try to lower down its prices in one way or other to decrease the demand.
Applancer is an open platform for discussion on all things like Blockchain , Cryptocurrency and Ico news updates. As such, the opinions expressed in this article are the author's own and do not necessarily reflect the view of Applancer .
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