Thanks to the proof-of-work algorithm, Bitcoin is extremely energy-intensive. The mining of the cryptocurrency consumes about as much energy a year as the whole of Austria. Bitcoin is also extremely ineffective compared to other payment methods such as Visa.
In the proof-of-work algorithm, the miners have to solve a mathematical problem. This is so heavy that all miners only find a solution together about every 10 minutes, which then mimics a new block in Bitcoin. This block then writes all transactions that have passed since the last block. The block is then appended to the blockchain and is therefore no longer changeable.
Miners are currently getting 12.5 bitcoins per block to mine. In addition, they receive the transaction fees of all transactions written to the block. While the transaction fees are only about $ 2,500, bitcoins are worth at least $ 80,000 even at the current price. So a lucrative business.
In order to increase profitability, miners have had to become more and more effective in recent years. While it was still sufficient in the beginning with Bitcoin to mine with a normal computer, there are now special ASIC Miner. These were only developed to mine Bitcoin. The developed chipsets are therefore designed only for the Bitcoin algorithm. Another important cost item is the electricity costs. Again, the miners have come up with new solutions in recent years. Not only have they moved into areas with very low electricity costs, there are also cases where mining farms were built right next to power generators to take in excess energy.
Bitcoin energy consumption per year
All together, the mining difficulty has increased and more and more computing power is needed to find a new block. Bitcoin currently consumes 74TWh of energy per year. That’s about as much as the whole country Austria. The fact that many miners are located in China and get electricity from coal-fired power plants, the CO2 emissions due to the bitcoin mining is enormous. Experts estimate that this year is about as high as 1 million transatlantic flights.
If we put the whole thing in relation to other payment methods such as credit card payments then it can be seen that a Bitcoin transaction consumes about as much power as 1 million Visa payments.
Cryptocurrencies like Ethereum, which are currently also on proof of work, therefore, want to switch to proof-of-stake in the long term, where no more energy-intensive mining is required. But Bitcoin will stay proof-of-work in the long-term, and energy consumption will continue to increase as hardware advances more and more computing power to mine a block. It can only be hoped that a lot of energy from sustainable energy sources will be mined as soon as possible. This is already the case with many mining farms in Iceland. Here, the cold air outside is used to cool the miners and the energy is taken from the geothermal energy. Beme News, now part of CNN, has done a good 6-minute reportage.
image by shutterstock
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