In recent years, the soaring price of Bitcoin has encouraged a rush of investors into the crypto. While just a few years ago you could buy a few tokens of this virtual currency, since 2020, the soaring cost of the currency has made it less obvious to acquire it. On the other hand, it is possible to obtain Bitcoin by mining it. This process of validating the transaction, which seems harmless, involves a significant consumption of energy. Here is an explanation!
What is Bitcoin mining?
In order to get an idea of the** energy consumption **of the Bitcoin network, it would be useful to have an idea of what its mining is. To ensure transparency in transactions, the network sets up a blockchain. The latter can be compared to a virtual universe with which all players can operate. Thus, when anyone in the network carries out a transaction, the miners can interact with the code.
This interaction is called mining. It is an operation that consists in validating transactions by group on the blockchain. The role of miners can be compared to that of a banker in a classic transfer process. When you send money from your account, the banker makes sure that you have the necessary liquidity in your account to complete the transaction.
This is the same process for Bitcoin miners. In the blockchain, performing the check (validation) is like solving a rather complex equation. No human can do it, hence the use of supercomputers. As you might expect, miners compete to be the first to validate a block. The remuneration is currently 6.25 BTC per validated transaction.
For mining, the players in the sector can :
- use simple computers (difficulty to get results) ;
- use powerful computers (optimized chance of winning, but low probability);
- join mining pools (real chance of winning);
- choose companies that invest in the best computing equipment;
Companies investing in powerful computing equipment can allow you to mine efficiently. However, the costs are usually expensive. Therefore, mining pools are the best alternatives. To learn more about the mining process, we suggest you read this complete guide on bitcoin which explains in more details the technologies involved.
How much electricity does Bitcoin use?
As you may have gathered, Bitcoin mining involves the use of powerful equipment that must run continuously. Because of their power, this equipment is very energy-intensive. It should be remembered that a single transaction consumes 2207.77 kWh. If this seems normal at first glance, when you compare this energy consumption to the average in the USA, there is cause for concern.
That last figure is equivalent to the energy consumed by the average American household in 75.67 days. When you take it over a year, Bitcoin peaks at 204.59 TWh. That’s the equivalent of all the electricity consumed by Thailand in one year.
For such high power consumption, you can imagine that the Bitcoin network has a significant impact on the environment. The validation of a transaction of this virtual currency leaves a carbon footprint of 1048.69 Kg CO2. To reach this threshold using YouTube for example, it would take 174,782 hours of viewing.
Similarly, the comparison with Visa transactions is equally staggering. Indeed, it takes 1,485,413 Visa transactions to consume the same amount of energy that a single Bitcoin transaction will take. This gives a clearer picture of the consumption that mining this crypto generates.
On an annual basis, Bitcoin transactions worldwide leave a carbon footprint equivalent to that of Kuwait. That’s about 97.14 Mt of CO2 that ends up in the environment.
Why does Bitcoin consume so much electricity ?
In the early days, Bitcoin mining was not as energy intensive. The current level of consumption and resulting pollution can be explained by the soaring price of said cryptocurrency. Many miners have seen Bitcoin as a fairly safe way to make money, even if it means investing in expensive hardware. The currency, while volatile, rarely falls. Even if it does, the drop will only be short-lived. It is a cryptocurrency whose cost remains on an upward curve.
As a result, an impressive number of miners are starting to work around the world. This unsurprisingly increases the power consumption of the Bitcoin network, which is growing at an exponential rate. In fact, the reduction in rewards does not seem to deter miners. Compared to the May 2020 reward of 12.50 **BTC **per validated block, the current reward is 6.25 Bitcoin tokens. However, the current cost is worth it when you consider that it is worth over $40,000 compared to $20,000 in 2020.
In China, for example, the power is produced by lignite, a type of coal whose combustion remains harmful to the environment. Similarly, it is an activity that produces 33.80 kt of electronic waste annually. This is the equivalent of what Holland produces in one year. Basically, it is an activity with a **strong polluting **power towards the environment. But that is only one way to look at it, as this power is not wasted, on the contrary. Plus, many improvements to the infrastructure are coming to minimize its impact on the environment.
In the same topic : how to reduce your ecological impact ?