Bitcoin Mining Comes At a Cost, And That Is Huge
The popularity and the demand for Bitcoins has increased manifold times in the past year, and so has been a phenomenal increase in the Bitcoin mining activities. This decentralized cryptocurrency has skyrocketed by over 900% in the past one year with it price crossing to new high above $10000 now.
However, one of the major concerns with the unprecedented rise in Bitcoin mining activities is that the overall global electricity energy consumption has also reached new heights. As per the latest reports, the energy used alone in Bitcoin mining activities in the past year is greater than the average electricity consumed by 159 countries of the world.
The latest figures released by U.K.-based energy tariff comparison service PowerCompare.uk are really eye-opening and alarming. According to the reports, as on Nov. 20, the annual electricity consumption in Bitcoin mining has reached a record high of 29.05 terawatt hours (TWh). This is equal to 0.13% of the world’s total annual consumption. Although this number might seem to be small in percentage terms, but, by having a comparative analysis it greater than the electricity consumption by Nigeria - Africa’s largest economy with a population of 190 million.
By considering the global average electricity cost, the estimated cost for Bitcoin mining is pegged at a whopping $1.5 billion. If the electricity rates in U.S. alone is considered, this accounts to $3 billion and nothing less. As per the study, in October 2017 alone, electricity consumption related to Bitcoin mining activities has grown by 29.98%. It the consumption continues to grow at this rate further, Bitcoin mining would use all of the world’s electricity consumption by February 2020.
The thing with Bitcoin is that due to its decentralized nature of operation, the blockchain network backing Bitcoin is secured by several groups of miners spread across the globe who have employed powerful and specialized computers at work in order to solve complex power-intensive cryptographic problems. As a result, the computers used for this process make use of high-end graphics cards or Applications-specific-integrated-circuits (ASICs), which is said to consume a considerable amount of energy. It is being said that mining one Bitcoin block consumes as much energy as the average weekly consumption of an American household.
Moreover, the mining activity is like a chain reaction. For successful mining of a block, miners are rewards with hefty price amounts which is almost a quarter million dollars in Bitcoin. With each mined block, the price of Bitcoin goes even further high and so the value of rewards. Thus miners put more computers at work thereby burning more amount of electricity.
As per the reports from Business Insider, 80% of the world’s Bitcoin mining is done in China - a country that is severely dependent on extensive coal and fossil fuels for electricity consumptions. This makes Bitcoin mining as a big environmental hazard.
This increasing energy consumption contributed by Bitcoin mining has raised serious concerns and it remains to be seen as to what alternative is been worked out for this.