Why Cryptocurrency Massive Energy Consumption Is Extravagant?
Do you know that bitcoin mining consumes around 128.77 terawatt-hours(TWh) a year? And is it likely to fall unless the value of currency collapses? Mining for cryptocurrency consumes a massive amount of power with heavy computers and machines, leaving a destructive impact all over the globe.
Mining is the process that involves transaction verification on the blockchain without relying on a central authority. Mining computers thrive on solving complex problems, and those computations require a massive amount of energy. There is a reward with newly mined coins and transaction fees once bitcoin miners solve this problem.
According to Cambridge University, bitcoin is presently representing 0.59% of the total global energy consumption. Digiconomist estimates that network energy consumption is hitting the figure of 82.026, which is, according to the site, comparable to Chile's energy consumption. Since the beginning of 2020, Bitcoin energy consumption has surged up to 80% amongst an immense evolution in digital currencies.
Let’s have a deep insight into enormous energy consumption and its adverse impact on environmental sustainability.
Massive Electricity Consumption
Cambridge university suggested that bitcoin mining consumes more electricity as compared to the electricity consumption in Argentina. According to online tools, bitcoin electricity energy consumption is more than Argentina, i.e. 121TWh, the United Arab Emirates, the Netherlands, i.e. 108.8 TWh, and presently creeping up to Norway, i.e. 122.20 TWh.
Specialized computers are connected to cryptocurrency networks to mine. Their main job is the verification of transactions that send or receive bitcoins. This process includes solving complex problems, providing an obstacle for the assurance of combating fraudulent activities. Moreover, critics claim that tesla’s decision to invest a hefty amount in bitcoin. This week, the currency value hit the figure of $48,000, and according to tesla’s announcement, it has brought up to $1.5bn bitcoin and plans to accept it as a payment method in the upcoming years.
According to the 3rd global crypto-asset benchmark study, 28% of the total energy consumed by crypto-mining come from renewable resources. People often develop an interconnection with a massive number of miners to the network to gain immense profits. That utilizes an unexpected amount of electricity because computers are more or less continuously working to solve puzzles. It is possible to estimate how much electricity is being consumed at a time by considering energy demand for the bitcoin network and the average electricity price per kilowatt hour ($0.05).
What Bitcoin Mining Experts Have To Say?
Let’s have a deep insight into what bitcoin mining experts have to say about the alarming bitcoin mining energy consumption, which is currently progressing by leaps and bounds.
#1 Dan Held
The head of growth at crypto exchange Kraken, Dan Held, proclaims that the bitcoin network has been unjustifiably aimed by those claiming that bitcoin is taking its energy consumption irrationally.
Dan Held declared that:
“What it really boils down to when people argue that they don’t like bitcoin energy consumption is they don’t actually like bitcoin. People who are not in favour of cryptocurrencies anticipate that bitcoin mining energy consumption is wasteful.”
Dan Held emphasizes the fact that everything in this world requires energy consumption, and with technological advancements, the amount of energy required to power that technology is facing immense growth in the near future. Almost all the things in our lives consume energy. Claiming that one utilization source of energy is less wasteful than others is absolutely subjective as all utilizations have paid market rates to use that energy.
Thillainathan told business insiders that more energy consumption is required as the bitcoin network grows and simultaneously the profitability of mining increases. As an operator of mines, he affirms that minors should take environmental enigma under consideration during the mining process as energy consumption can adversely impact. He expects that bitcoin mining is beneficial as bitcoin prices surge in the market, and more miners should consider utilising renewable energy resources with this upcoming revolution.
He claimed in front of Insider that:
“Being a strong believer of bitcoin, it is an efficient way to store wealth but being an infrastructure provider, it is a dire need that we are required to become as environmentally friendly as possible.”
Thillainathan stated that the energy utilised during mining is called “dirty energy”, and unfortunately, the energy is not sustainable in the longer run. He professes that one day the government will crackdown on the utilization of coal plants.
#3 Mason Jappa
The CEO of blockchain solutions, Mason Jappa, who is also working as an operator of some of the largest mining rigs in the United States, affirms that bitcoin miners are financially incentivized for the operation on the cheapest possible electricity, which often concludes that they utilize energy that would have become useless.
Mason Jappa tweeted that,
“Bitcoin mining enhances energy efficiency and simultaneously reduces kWh energy rates for the populous through curtailment agreements, ceasing energy consumption during peak hours, aims at renewable energy, improves energy technology, and reduces natural gas flaring. ”
Jappa claims that US mechanisms are powered by the process which is called “gas-flare recapturing”. A chunk of gas is flamed out in the air when natural gas is mined. Bitcoin miners prevent that to release into the air and capture that flare for energy utilization.
Environmental impact is thriving in parallel to bitcoin’s emergence and prominence. There would be no doubt in saying that crypto mining requires an enormous amount of energy. According to the latest data analysis by Cambridge bitcoin energy consumption (CNBC), this energy consumption might alarm Treasury Secretary Janet Yellen.
Yellen said that:
“It is the most incompetent method of carrying out transactions, and the amount of energy consumes during the mining process is staggering.”
Also, CAGF explained that:
“The more machines operate for mining, the more there is a possibility to solve complex problems. However, more operating machines mean more energy consumption which raises the question of miners’ cost. ”
CCAF affirms that they do not have enough data that backs the determination of crypto solution carbon footprint. Hence the major concern is growing bitcoin mining energy consumption and the threats that it is imposing to United Nations Sustainable Development Goals in the upcoming years. Also, it is a major concern for encountering the climate crisis.
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