The amount of electricity used in mining bitcoins is a subject that has been debated for several years, says economist Alex de Vries, who studies bitcoin and other cryptocurrencies. His study into the amount of energy being used to mine bitcoins is the first peer-reviewed research on the topic and was published in the
scientific energy journal Joule.
Bitcoin and other cryptocurrencies were invented in 2008 by an anonymous computer programmer, and bitcoin mining refers to the work done by computers connected to the global Bitcoin network. We're not talking about just one or two computers, either, but thousands of them.
According to
the BBC, the computers solve complex mathematical problems that in turn, validate transactions between users of the cryptocurrency without the use of an intermediary. But in order to validate a transaction and prevent a duplication, a process known as “proof-of-work" is required, and this entails using an army of computers, all working at the same time.
OK, if you are still with me, the bitcoins are exchanged along a public digital ledger called the blockchain. It is in the blockchain where all the complicated mathematical calculations, called "hashes" are made. And anyone wishing to join in and help in verifying the transactions can do so. They are rewarded with bitcoins.
Basically, it is a complicated process and a lot of hard work. De Vries estimates that globally, computers on the bitcoin network are crunching about 26 quintillion hashes — that's 26,000,000,000,000,000,000,000,000,000,000 — every second of every day, reports
CBC Canada.
The Estimated Number of Terahashes per Second (Trillions of Hashes per Second) Performed by the Bitcoin Network
Source: Blockchain.info.
Alex de Vries/Joule
Use of electricity in bitcoin mining
De Vries calculates that right now, the computers in the network, called "miners," are consuming at least 2.5 gigawatts of power per year. However, by the end of this year, they will collectively be using three times that amount of electricity, or 7.5 gigawatts a year.
“The main problem is that the energy consumption primarily relates to how agreement on the underlying blockchain is reached,”
de Vries told Gizmodo. “Mining makes it a big competitive lottery where the winner—every 10 minutes—gets to create the next block for the blockchain. The built-in reward for this process is fixed, so it motivates participants to constantly add new machines to the network to get a bigger slice of the pie—the more computational power the more you win.”
“Mining power is high and getting higher, thanks to a computational arms race, Roberto Frota Decourt, a cryptocurrency expert at the Unisinos Business School in Brazil who wasn’t involved in the new study, told Gizmodo.
“The required number of zeros at the beginning of a hash is tweaked biweekly to adjust the difficulty of creating a block—and more zeros means more difficulty. The bitcoin algorithm adds these zeros in order to keep the rate at which blocks are added constant, at one new block every 10 minutes. The idea is to compensate for the mining hardware becoming more and more powerful.”
Bitcoin is the first decentralized digital currency, as the system works based on the blockchain technology without a central bank or single administrator
Lars Hagberg, AFP
Bitcoin mining a vicious cycle
Basically, the whole bitcoin mining process has turned into a vicious cycle of more computer use and more energy requirements. And the process of mining has turned into a game, except the winners only get half of what the reward should be. And as the hashing get harder, it takes even more computations to create a block.
And on top of that, Decourt points out that the bitcoin block mining reward gets cut in half every 210,000 blocks, so it actually takes twice the amount of computing time and energy to make the same amount of bitcoins.
Not everyone believes De Vries is accurate in his assumptions on the energy being used to produce bitcoins, primarily because he has not taken into consideration competing cryptocurrencies, also known as altcoins. There are other ways to build cryptocurrencies, and they are gaining in popularity.
Called proof-of-research and proof-of-stake, these transactions create less energy intensive coins. And then there is the advancement in technologies that make the machines used for mining bitcoins more efficient. So this leads to the very obvious question - Does bitcoin mining use too much electricity?
