Bitcoin electricity: The Energy to Sustain Blockchain
Bitcoin electricity concerns are growing. Even though the value of the cryptocurrency has stumbled in recent months, the demand for energy-intensive mines remains.
Bitcoin and cryptocurrencies are the great gold rush of our current century, and crypto-mining has opened the door to a new industry. One country in particular has become one of the world’s top locations for cryptocurrency servers – Iceland.
Amid the positive promise of a growing sector in the economy comes the issue of bitcoin electricity supply. In fact, Iceland could soon face an energy shortage. The country’s servers now exceed the consumption of private energy users, and if Iceland continues to attract new companies investing in cryptocurrencies, energy producers are concerned that they won’t be able to keep up.
Although there are no recognised authoritative sources on cryptocurrency energy usage, estimates have claimed that:
- Bitcoin consumes 30 x more electricity than Tesla cars
- Bitcoin’s electricity usage is set to more than triple in 2018, consuming as much energy in a year as the entire nation of Argentina
- In 2017, Bitcoin consumed 36 terawatt hours of energy—as much as the country of Qatar
Why is bitcoin electricity use so intensive?
Every cryptocurrency relies on a ‘blockchain’ platform which allows for the trade of digital currencies. Because there is no single network authorised to monitor payments, any transaction involves a massive number of mathematical calculations, and thus server capacity. This results in high electricity demand, which is embedded into the core of cryptocurrency mining.
In fact, offset against the costs of mining equipment and company profits, electricity makes up 60% of total mining revenue.
Why Iceland for bitcoin electricity?
Because crypto-mining is so energy-intensive, miners need access to power that is both reliable and cheap. The energy in Iceland meets these criteria, but for how long? The future of bitcoin and other cryptocurrencies depends on how cost-effective it is to produce.
The Smarter Business Solution
Smarter Business is one of UK’s biggest energy brokers in the UK and can help your crypto mining company with source cost-effective, reliable energy. Contact us today for all your computing requirement needs.
Bitcoin Electricity Consumption – Part 2
The debate rages on as bitcoin electricity consumption increases…
Earlier this year, we published this article on bitcoin electricity consumption, reporting how Iceland has become one of the top locations for cryptocurrency servers, which now exceed the consumption of private energy users.
Now, the criticism amongst ecological circles and the debates around bitcoin electricity consumption have been fuelled by a paper by Alex de Vries of PwC’s Experience Center in Amsterdam.
His paper, Bitcoin’s Growing Energy Problem, concludes that bitcoin’s electricity consumption could soon be heading above a consumption rate of 8 gigawatts (GW) per year.
The paper’s findings:
- At the moment, the bitcoin network consumes at least 2.55 GW of electricity – as high as the annual energy consumption of Ireland.
- This could reach a consumption of 7.67 GW in the future – close to the energy consumption of the entire nation of Austria (8.2 GW).
- By the end of 2018, the mining of bitcoin could be using as much as 0.005% of the entire world’s energy use.
The reality is that bitcoin uses a massive amount of energy. Author Alex de Vries says: “The bitcoin development community is experimenting with solutions such as the Lightning Network to improve the throughput of the network, which may alleviate the situation. For now, however, bitcoin has a big problem and it is growing fast.”
Why does bitcoin mining require so much energy?
The bitcoin mining process uses computers with software that can solve complex mathematical problems. A new block is added to the blockchain every time a new problem is solved, rewarding the miner with bitcoins. This process requires a lot of energy because the computers need to ledger all the transactions so that the same coins aren’t spent twice – this takes time and consumes a lot of electricity.
How can bitcoin electricity consumption become sustainable?
De Vries’ research reveals that if the price of bitcoin continues to go down, and the amount of energy needed to mine it continues to rise, bitcoin investment could become inefficient.
One of the ways this can be avoided is if the world shifts to 100% renewable energy in the years ahead. With renewables, the environmental and efficiency concerns around bitcoin energy usage would be negated.
But is it possible to go 100% green?
New research from Renewable and Sustainable Energy Reviews journal found that a shift to total renewable energy using contemporary technology is both possible and affordable.
Co-author of the research, Brian Vad Mathiesen of Aalborg University says: “There are some persistent myths that 100 percent renewable systems are not possible. Our contribution deals with these myths one-by-one, using all the latest research. Now let’s get back to the business of modelling low-cost scenarios to eliminate fossil fuels from our energy system, so we can tackle the climate and health challenges they pose.”
If we were to eliminate fossil fuel usage, this would eliminate the environmental and efficiency challenges caused by energy-intensive bitcoin mining.
It’s not impossible to imagine a world in which bitcoin is used exclusively, backed by green energy. If there’s one thing we’ve learnt over time, it’s to ‘never say never’…