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.