What is Bitcoin?
In case you’ve been living under a rock or have just dramatically woken up from a soap opera style coma, here’s a brief rundown of what Bitcoin is.
The first and by far the biggest of the avalanche of “cryptocurrencies” now available, Bitcoin is a decentralised digital currency. The idea is that it’s more secure and resilient than traditional iterations of trade. It’s pretty complicated, but all you really need to know is that it’s a digitally stored currency that’s truly exploded over the past few years, and you can earn Bitcoin by setting your computer to do complex maths problems.
What is mining and how does Bitcoin consume energy?
As I mentioned, earning Bitcoins (or tiny fractions of Bitcoins) is done by using your computer processing power to solve absurdly complex maths problems. Why the system works like this is a good question but one that we’d need about an hour to answer. The salient point is that high level maths problems are completed by your computer and you get a tiny fraction of the world’s favourite cryptocurrency for your trouble.
Back when Bitcoin was a new concept, this ‘mining’ was done by your bog standard computer processors, but people quickly realised that more power meant more Bitcoin, and it rapidly evolved into using the faster and more power-hungry graphics cards. These days specialist tech is used, often in massive networks or vast data mining centres.
The competitive nature of the mining means that each miner is compelled to develop faster computers, bigger networks and use ever more electricity to do it. The bigger the computer or network, the bigger the reward, but also the bigger the energy usage.
How much energy does it use?
According to testimony provided by Princeton computer scientist Arvind Narayanan to the Senate Committee on Energy and Natural Resources, Bitcoin is now responsible for nearly 1% of global energy consumption.
What can be done?
Many of the biggest data mining companies having begun switching over to microgeneration and producing their own clean energy to help power their Bitcoin production. A lot of Bitcoin mining centres are based in Switzerland, Canada, and Paraguay – countries that offer great financial incentives for clean energy, which is helping to encourage growth of clean energy Bitcoin operations. We can hope to see more of Bitcoin and other cryptocurrencies switching to renewable energies.
Some people even suggest that the energy consumption of cryptocurrencies are helping to encourage green energy innovation and drive us towards a more renewable system of energy production.
Think we missed something? Do you have a different opinion?
Comment below to get your voice heard…
Professor Narayanan’s testimony has been widely discredited, you’re quoting sources that no one takes seriously to make the issue seem more sensational. Poor journalism.
Undoubtedly a lot of energy is spent into computing arbitrary riddles we don’t need to solve… eg. we only need to solve to “mine” a digital currancy that could be replaced by another arbitrary digital currancy that runs without this mayor flaw.
Seems like a big waste of ressources.
But isn’t this better for the environment than the amount of resources that go in to psychical money?
It’s counterintuitive but given that greed drives geopolitical policies and Bitcoin financially incentivises the development of cheap, clean and abundant energy sources, I wouldn’t discount Bitcoin as being an ironic force for environmental good.
Proof-of-work-based blockchains like bitcoin do not necessarily incentivise clean energy. It really only needs cheap and a lot of energy and/or high bitcoin prices. Energy waste is inherent to POW-technologies, actually waste is their primary aim. Thus POW is a major custruction flaw and should be replaced by mechanisms that do not needlessly cosume energy,
… in the light of the imminent climate crisis “increased energy consumption based on greed” does not seem to be an ideal way towards a more sustainable society.
Proof-of-work (POW) -based digital currancies like bitcoin are inherently wastefull.
The waste of energy is an arbitrary part of their design. There are alternatives to POW (if we really must have crypto).
In the light of the imminent climate crisis POW based blockchains have a major construction flaw and should be abandoned asap.
If you care for the environment – don’t use POW-based crypto (next to other things).
I just read a good piece on this subject, it seems well balanced.https://www.environmentblog.net/is-bitcoin-bad-for-the-environment/