With its value skyrocketing in recent years, Bitcoin is a hot topic right now. But the value of a Bitcoin is not the only thing that is growing. In fact, Cambridge University research suggests that Bitcoin uses more electricity on a yearly basis than entire countries. Mining for cryptocurrency uses a lot of power, and requires heavy computer calculations to verify cryptocurrency transactions. According to the researchers, this consumes over 120 terawatt-hours (TWh) annually, and this power use is unlikely to fall unless the value of Bitcoin drops.
Is Bitcoin Bad for the Environment?
Many believe that cryptocurrency is the currency of the future, but is it bad for the environment? Will Bitcoin and other cryptocurrencies undo the hard work that has been put in around the world so far to improve the condition and health of the planet? According to some critics, Tesla’s decision to make heavy investments in Bitcoin undermines the environmental image displayed by the electric car company.
The rising price of Bitcoin offers even more incentive to miners to run even more machines and consume more power. As the value of Bitcoin increases, so does the energy consumption that is used to mine it, according to researchers at the Cambridge Centre for Alternative Finance.
Exactly How Much Energy Does Bitcoin Consume?
How much energy is consumed due to the increasing popularity of cryptocurrency trading? According to the online tool developed by the Cambridge researchers, Bitcoin’s electricity consumption is currently ranked above several countries including Argentina, the Netherlands, and the United Arab Emirates. It’s using a very similar amount of energy to the amount that Norway uses on a yearly basis.
In the UK, the energy that Bitcoin uses could be used to power all the electric kettles in the country for almost three decades. However, in comparison, the amount of electricity that is consumed on a yearly basis by devices that are left switched on but inactive in homes around the US could power the entire Bitcoin network for a full year.
How is Bitcoin Mined?
Mining Bitcoin requires often specialized computers which are connected to the cryptocurrency network. They are used to verify transactions by people who sell or purchase Bitcoin. As part of the process, Bitcoin miners are required to solve puzzles that are not integral to providing verification, but ensure that there is a hurdle to cross to ensure that the global record of all Bitcoin transactions is not edited fraudulently. As a reward for completing these, Bitcoin miners will occasionally receive small amounts of Bitcoin.
Higher prices have increased the value of these rewards, and fueled wider interest in buying and selling crypto via increasingly diverse methods beyond using exchanges. At the same time, some miners have expanded their networks to consist of multiple computers. Some will even set up entire warehouses of computers that are there for mining Bitcoin alone. Since the computers are working to solve the puzzles on a constant basis, this uses a huge amount of electricity.
While Bitcoin is becoming more and more popular as an alternative currency and investment option around the world, how efficient is it really?