While the popularity of bitcoin has increased considerably over the last few years, the electricity usage for transactions and mining are coming under scrutiny. Recent studies showcase that the amount of energy being used by computers which mine the digital currency this year, is much greater when compared to the annual usage of around 160 countries.
For those who do not know, mining is the process through which transactions are verified by the network, through the solving of complex cryptographic problems. To make sure that transactions aren’t falsified, and that records of ownership remain unchanged on the blockchain network, transactions must be signed off into blocks, which are then verified by the miners. Once a block is solved, a 12.5 BTC reward is given to the miner, or mining pool responsible. This amount serves as the main incentive for miners, but is also the way that new bitcoin is added to the market.
A research study carried out by PowerCompare showcases that the amount of energy consumed by mining bitcoin throughout the world in one year, greatly exceeds the annual usage for numerous nations, including most African countries. With this in mind, it has been estimated that in the year of 2017, 29.05TWh of electricity was used for mining the currency, whereas Ireland consumed 25TWh.
It is however important to keep in mind the fact that Satoshi Nakamoto, the creator of Bitcoin, designed the code in such a way to limit the total supply to 21 million bitcoin. Additionally, block mining rewards are also cut by half every four years, to incentivise value growth. Because of these aspects, mining difficulty has increased more and more, and it now required more resources compared to several years back, when people could mine from their own computers, without needing to invest into mining rigs. As the difficulty continues to grow, miners are turning to more powerful computers, which in turn, consume more energy when mining.
The study was also carried out in order to raise awareness about the environmental impact that this electricity could have. While there are limited research efforts in this direction, most people do not believe that bitcoin mining has a big impact on the environment.
At this time, the bulk of mining activity is done in China, which is known for lower electricity costs when compared to other regions of the world, such as the United States, or the United Kingdom.
Based on everything that has been outlined so far, what are your thoughts on the amount of electricity being used to mine bitcoin? Do you think that it could have a true environmental impact? Let us know your thoughts in the comment section below.