Over the past few months and years, there have been many allegations regarding the electricity consumption associated with the Bitcoin network. No one will be surprised to learn most of these claims are vastly exaggerated and completely miss the point. An interesting rebuttal on Bloomberg further confirms there are a lot of misconceptions out there.
Bitcoins Energy Consumption is Not a Big Problem
Most people already know how the Bitcoin network operates. Transactions are broadcast to nodes, which relay the information to mining pools. To ensure transactions are processed and validated, miners need to dedicate powerful hardware to the process. This requires a lot of electricity and is often considered to be a big waste. At the same time, there are environmental concerns over what Bitcoin mining is doing to our planet.
As it turns out, there are very few reasons to be even remotely concerned with Bitcoin mining from an environmental perspective. It is true the Bitcoin mining process becomes more complex every so often and requires more powerful mining hardware to process and validate transactions. At the same time, devices often become far more energy-efficient and reduce their environmental footprint in the process. No one can deny the entire network still uses a ton of electricity, but there are no “apocalyptic concerns” to speak of at this point in time.
A very recent study claims the Bitcoin network will consume 8.27 terawatt-hours of energy per year at current prices. Surprisingly, this is far less than most US data centers and it’s a drop in the bucket relative to the total US energy consumption. While this is still pretty significant for such a niche market, it also shows Bitcoin mining is no threat to the environment whatsoever. To the contrary, we’ve seen more and more mining operations focus on reusable and renewable electricity rather than tap into the main power grid right away.
Perhaps the most intriguing comparison raised in the entire Blomberg article is how Bitcoin consumes less electricity than the printing of bills and coins. The physical money we use today requires a total of 11 terawatt-hours per year to produce. Gold mining, another very labor-intensive process, requires as much as 132 terawatt-hours. These numbers make Bitcoin and its 8.27 terawatt-hours look like a science fair project. There are far bigger concerns in this regard than Bitcoin or any other cryptocurrency.
While no one should ignore the fact that the Bitcoin network shreds through electricity, some of the scientific reports out there need to be taken with a grain of salt. Processing Bitcoin transactions requires a lot of energy, which is why miners get paid a reward for including every transaction. The costs of electricity have to be paid off somehow, and most miners make a small profit if the Bitcoin price is favorable. However, we will see more people shift to renewable energy sources in the future, as it simply makes a lot of sense.
It will be interesting to see what the future holds for Bitcoin as a whole. There are a lot of concerns regarding this cryptocurrency, yet it has thrived despite major opposition. It is evident there is nothing to be concerned about in terms of its electricity usage.
This article was first published by JP Buntinx at The Merkle