In little over a decade, BitcoinIt has evolved from a fringe technology that was popular with cryptographers to a mainstream technology. The ninth most valuable asset in the worldMarket cap
The cryptocurrencyThe dramatic rise of the company has made it millionaires and reimagined money. It also launched a multi-billion-dollar industry based on its revolutionary decentralised technology. It has also brought about some undesirable side effects.
It takes nearly as much energy to support Bitcoin’s underlying network than Argentina, which has led to criticism about its environmental impact.
Analyse by the University of CambridgeThe Bitcoin network consumes more that 121 terawatthours (TWh), which would make it one of the top 30 electricity consumers worldwide.
The rising price of Bitcoin, which has risen to over $42,000 in the last month, has fuelled energy needs.
Concerns about Bitcoin’s energy requirements have been present since its inception. Hal Finney, crypto pioneer, tweeted about future CO2 emission on 27 January 2009, just two weeks after receiving the first Bitcoin transaction from Satoshi Nagamoto (the pseudonymous creator of the cryptocurrency).
The amount of energy Bitcoin’s network uses has not been a prominent issue until 2017, when a major rally dramatically pushed its energy needs up to the level a small country. The market began to cool down in the years that followed, and so did its energy needs. However, the most recent all-time high reached this week is more then twice the level of three and a quarter years ago. This time, its energy needs are even higher.
Bitcoin’s energy consumption has more that quadrupled since its peak in 2017, and it is likely to get worse, Charles Hoskinson (CEO of the leading cryptography company IOHK) tells us. The Independent.
Because Bitcoin’s price rises, so does its carbon footprint. This is because there will be more competition for the currency and therefore more energy.
Bitcoin’s environmental impact can be exacerbated by the large number of miners based in China. This country holds more than two-thirds (or more) of all power. Coal.
To generate new cryptocurrency units, the mining process involves solving complex but arbitrary mathematical equations. This requires a lot of computer processing power.
Bitcoin miners tend to go where electricity is cheap, which means that the problem is not Bitcoin, but with a lack thereof. renewable energy production.
There are solutions, and some eco-friendly mining facilities are already in operation on a large scale.
Cryptocurrency miners in Iceland and Norway are using cheap hydro-electric or geothermal energy to power the machines. The low temperatures in these countries help reduce costs by cooling down the computer servers naturally.
The University of Cambridge hosted its third annual “Second Year” event last year. Global Cryptoasset Benchmarking StudyThe study found that 76% cryptocurrency miners used electricity from renewable sources for their operations. This was an increase of 60% from the 2018 benchmarking study.
According to projections of the International Renewable Energy Agency (IREA), this trend is expected continue. Report last yearRenewable energy sources are becoming more cost-efficient than fossil fuels.
The current infrastructure supporting the Bitcoin protocol cannot be sustained. However, the beauty of the protocol’s incentive structure will force miners adopt the cheapest form, which in the near-term will be renewable energy. Don Wyper, COO at DigitalMint tells us. The Independent.
I think the latest University of Cambridge study is misguided, as Bitcoin is acting as a digital gold and therefore should be compared to the energy consumption of other store-of-value-assets… The annual electricity consumption of the gold mining industry is 475 million GigaJoules.
And if Bitcoin can be the digital currency it was originally intended to be, then we must consider all the electricity required for currency creation, destruction, transmission, securitisation and loss. Personally, I believe. Climate changeIt is one of the most pressing issues in the world right now. But, those who claim Bitcoin will lead to more environmental destruction do not understand that Bitcoin is actually an accelerant to improving our environment.
Alternative cryptocurrencies have also attempted to address Bitcoin’s environmental problems by changing the underpinning technology to make it less powerful.
Cardano is one of these. Hoskinson claims it is 4,000,000 times more efficient than Bitcoin because of its Proof-of-Stake blockchain. It validates transactions based not on the computational processing power but how many coins they have.
Cardano is being built to scale in order to meet the demands of global consumers and businesses at higher volumes than existing global financial networks. However, the entire global network consumes no more energy that a large family home, according to Mr Hoskinson.
If Bitcoin’s transition to renewable energy sources does not happen quickly, Mr Hoskinson is among several experts who predict that investors and consumers will look to other cryptocurrencies that are less environmentally-damaging.
Scott Morgan, Blockchain consultant and Blockchain consultant, tells us that I believe that fear over climate changes is far more powerful than fear of missing out (FOMO). He says this to explain why this new wave in institutional and retail Bitcoin investment is being driven by fear. The Independent
Bitcoin can do amazing things in the world. It is a technology asset. [But]Other cryptocurrencies consume less energy.