Mammoth Energy Consumption Of Bitcoin Can Endanger Our Planet Pretty Soon
2017 surely had ushered in heavy gifts for the bitcoin holders by filling up their kitty. However the price of bitcoin is not the only thing which is showcasing a positively shaped graph, the energy consumed for mining the same had also been increasing ever since. This is leading to widespread concerns among people and well they simply cannot be blamed for the same. The Bitcoin Energy Consumption Index tracker had revealed that the annual energy consumption of Bitcoin is equivalent to about 32 terawatt-hours which is similar to the yearly electric consumption of Serbia. The yearly energy consumption courtesy Bitcoin is already ahead of 159 countries worldwide including most African nations and Ireland.
Francois Sonnet, the co-founder of ElectriCChain, the energy generation data project revealed that the energy requirement of each bitcoin transaction is equivalent to 4000 Visa Card transactions. Another U.K. utility pricing comparison website Power Compare revealed that energy consumption for fuelling the crypto spectrum has increased by 30% in November. If this growth rate of energy usage retains its present stature, then it won’t be long before the same overtakes the entire electricity requirement of U.S. within July 2019 and the whole world by 2020. The ever evolving crypto industry understands the true value of adopting energy-efficient business models in the backdrop of concerns regarding the current mining methods which could endanger our planet. Chris Conway, author of a recent report on Bitcoin energy usage and managing director of accountancy firm Accounts & Legal Consultants was quoted as saying that, “More energy efficient algorithms, like proof-of-stake, have been in development over recent years.”
“Bitcoin could potentially switch to such a consensus algorithm, which would significantly improve sustainability. The only downside is that there are many different versions of proof-of-stake, and none of these have fully proven themselves yet.”
The independent verification of blocks in each distributed ledger without any central authority to overlook the same serves as one of the most critical factor in the energy usage for blockchain mode. Proof-of-work protocol requiring a substantial amount of computational power is utilized by modern day cryptocurrencies for their authentication drill. Sebastiaan Deetman, an environmental researcher has described in Motherboard that, “bitcoin transactions are validated and processed by a decentralized network of volunteers, usually hosting dedicated hardware to perform calculations, called ‘hashes.’”
Such calculations are entered into for deriving solutions to complex mathematical algorithms. Transaction fees and new bitcoins are rewarded to volunteers who come out with a solution to this mathematical riddle. Deetman exclaimed that, “this network of so-called bitcoin ‘miners’ ensures the security of the system, but unfortunately also consumes a lot of electricity.” The algorithmic equations become all the more difficult with every passing second. Tam Hunt recently wrote in a report concerning solar-powered mining for GTM that, “with an approximately 132-year discovery cycle to mine all 21 million bitcoins, mining power demand will go up exponentially.” But just when you thought that putting an upper limit on Bitcoin mining can solve all these problems, then Bitcoin is just a small part of the big world of cryptocurrencies wherein newer alternatives to Bitcoins are being explored day in and day out. Ethereum, the second largest blockchain network closely following Bitcoin uses about one-third of Bitcoin’s energy requirement which is about 11 terawatt-hours yearly and similar to Zambia’s electricity consumption. Conway says:
“It’s impossible to accurately say what the total consumption of the cryptocurrency mining trend is, but if Bitcoin and Ethereum combined were a country, it’d be the 55th biggest consumer of energy in the world. Put over 1,300 more cryptocurrencies on top of that and you can imagine the figures. Adopting Bitcoin as a major currency anytime in the next few decades could have a serious impact on climate change.”
Bitcoin as an organization is very well aware of its impact and has for long been advocating about optimizing energy usage. Intense requirement is increasingly being felt for locations having plentiful but cheap energy reserves by bitcoin mining concerns around the globe. Genesis Mining, had set up the world’s biggest Bitcoin mining facility in Iceland, where it shall be able to run off geothermal energy. Solar energy is also considered as a potential source for bitcoin mining however it is not evident whether the same has yet been explored by the computing firms or not. Sonnet announced that a new version of Bitcoin Core software requiring less computing power and running on bitcoin’s nodes can bring upon major reduction in non-renewable energy usage in days to come.
As a huge array of startup firms are slowly stumbling upon the goodness of blockchain technology and implementing the same in their energy sector, the need for making use of alternative energy sources is increasingly being felt. Sonnet stated that organizations like “SolarCoin could run through data loggers, daily, on less than 0.07 kilowatt-hours a day,” thus making it “thousands of times more efficient than Bitcoin. There are indeed more efficient solutions.”
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Tarunima Ghosh Laha
Tarunima Ghosh Laha is a Finance Post Grad from St. Xaviers who believes Finance is more than just Balance Sheets and Ledger creation. This filmy bookworm who believes she was a sloth in past life also nourishes a penchant of owning a private zoo someday. Equipped with a laptop and online Lexicon she is all set to give finance a glamorous makeover in the form of exciting writeups with bang on info and flashy new words.