Ever since cryptocurrencies began getting traction, there has been a lot of discussions about the activity of bitcoin mining. While there is no doubt that Bitcoin mining is indeed vital but the question is, is it so important that the energy consumption figures can be overlooked? Is it sustainable? Let’s dive into the details.
Bitcoin is the number one digital currency. The striking difference between conventional money and cryptos, such as Bitcoin, is that the latter is not regulated by any central authority like the former, even for a bitcoin lottery. Bitcoin, in fact, finds backing from millions of computers spread around the world, referred to as nodes. These nodes store previous transaction information as well as assist in verifying their authenticity.
The activity of Bitcoin mining is similar to how traditional transactions are documented by POS systems or banks. It is done by Bitcoin miners who clump together transactions in “blocks” and add them to the blockchain or a public ledger of previous transactions.
The records of these blocks are also maintained by nodes for future verifications. Anyone can access the records as it is stored on the public blockchain. Also, the Bitcoin mining software process results in the generation of new Bitcoins.
What’s important to note is that the mining is done by high-powered computers with the capability of solving complex mathematical problems. It requires immense work along with luck to solve such problems, much like the chances of striking gold by mining the ground. The chances of computers solving one such problem is around 1 in 13 trillion, which indicates the amount of energy it requires to perform that.
Of late, there has been a lot of debates around the energy consumed while mining Bitcoin. As per the analysis, a single Bitcoin transaction consumes about 651.57 kWh. That’s equivalent to the power consumed by an average US household over a period of about 22 days. Moreover, a single transaction emits a carbon footprint of 309.50 kg CO2, which equals about 51,583 hours spent watching videos on YouTube.
The annual footprints are even more surprising. Bitcoin mining leaves a carbon footprint of 34.73 Mt CO2 while it consumes about 73.12 TWh of electrical energy yearly.
There have also been comparisons between gold and Bitcoin mining with both sides having significant supporters. As per the stats, gold mining consumes about 475 million GJ (gigajoule), costing about 105 billion USD per year. Bitcoin mining, on the other hand, consumes 183 million GJ, costing 4.5 billion USD a year.
While the continuous cycle of block mining is attracting more and more people from across the world to mine Bitcoin because of the incentives offered, it has tremendously increased the total consumption of energy by the Bitcoin network over the years. Some reports also suggest that how Bitcoin is consuming more energy than several nations, which is clearly not the case with mining gold.
However, considering the cost perspective, gold mining is more expensive than Bitcoin mining. Moreover, if the developers reduce the amount of data required for verification per block in Bitcoin mining, the transactions could become cheaper as well as faster.
Considering the current scenario and analytical stats, Bitcoin energy consumption is expected to grow in the future. A predictive model also indicates that miners would spend almost 60% of their profits on electricity in the future, which doesn’t quite fit into the sustainability zone. However, such stats haven’t yet driven people away from mining Bitcoin as the interest seems to only grow with time, thanks to the crypto’s incentives and skyrocketing prices.