Bitcoin now consumes more energy per year (over 121 terawatt-hours) than Argentina and the United Arab Emirates. (Image Credit: André François McKenzie/Unsplash)
If Bitcoin were a country, it would rank 33rd in energy consumption around the world. According to an analysis by Cambridge University, Bitcoin consumes over 121 terawatt-hours per year, which is 0.5% of the world’s energy production. It’s also more than what Argentina and the United Arab Emirates use yearly. Cambridge University’s Bitcoin Electricity Consumption Index tracks the power draw of Bitcoin mining, which is then compared to other electricity uses to show cryptocurrency’s impact.
To mine Bitcoin, powerful computers connected to the cryptocurrency network verify transactions made by people sending or receiving Bitcoin. This process involves solving increasingly difficult math problems, which also prevents anyone from fraudulently editing global transaction records. If miners solve the problems, they’re rewarded with a small amount of Bitcoin. To boost profits, people connect miners to the network. This consumes a lot of energy because these computers are always working to solve math problems.
Bitcoin’s value continues to increase, which is now priced at over $50,000. Now that supply is declining, thanks to Tesla’s $1.5 billion purchase of Bitcoin, big-name industries have started investing in cryptocurrency. However, Bitcoin isn’t the only cryptocurrency that miners are attempting to obtain. In 2020, over 1,650 cryptocurrencies were available, from Ethereum to Dogecoin. These are trying to be as successful as Bitcoin, and other currencies are likely to enter the market.
The bad news is that it doesn’t seem like it’s going to end. Experts expect mining and energy consumption to continue increasing unless Bitcoin’s price drastically drops. Moreover, hardware companies that develop powerful components every year are boosting the graphics card’s power draw, with sophisticated models consuming 300W to get maximum performance from each chip. Cryptocurrency’s impact on the environment is expected to worsen since mining rigs use a large amount of graphics cards over long periods.
Due to the complexity of the calculations, it’s difficult to predict how much energy Bitcoin can use in the future. At the start of 2017, Bitcoin consumed 6.6 terawatt-hours of electricity per year. That number increased to 67 terawatts in October 2020. Months later, it jumped to 121 terawatts, which is enough power to run Cambridge University for close to 700 years.
Cardano, an alternative cryptocurrency, for example, uses its proof-of-stake blockchain to consume a lot less power than Bitcoin. It works by validating transactions based on how many coins a participant has instead of relying on their computational processing power. This makes it four million times more energy-efficient than Bitcoin.
Have a story tip? Message me at: http://twitter.com/Cabe_Atwell