Bitcoin is slowing down the move away from fossil fuels
When Bitcoin, a cryptocurrency and a unique service provider of financial transactions that doesn’t require governments to issue currency or banks to process payments, launched nearly 10 years ago, it resulted in nothing more than nerdy curiosity. It failed to gain much attention then, because it seemed too complex and far-fetched.
But in late 2017, the whole Bitcoin fuss came to light and experienced a significant boom by breaking the $10,000 barrier of the value of a single unit, and nearly hit $12,000 on December 6, 2017, marking a 1,200% increase in value in 2017. At the beginning of the year, it was less than $1,000.
The popularity of Bitcoin has created a global surge in energy consumption. Its creators projected it as a replacement for money itself, and developed it as a secure, dispersed, anonymous method for transferring interest between people.
But what they might not have accounted for is the skyrocketing amount of energy used to mine the Bitcoin, and people are getting worried. In simple words, Bitcoin is decelerating the effort to attain a speedy transition away from fossil fuels. Considering the rapid growth of climate footprint apart from the energy consumption, Bitcoin is a malignant development, and it’s just the beginning.
According to Digiconomist’s Bitcoin Consumption Index, the Bitcoin network is consuming power at an annual rate of 32TWh -- roughly equivalent to Serbia’s yearly electricity consumption, and to at least 159 other countries’ yearly electricity consumption, including Ireland, and most nations in Africa.
Each Bitcoin transaction is estimated to require the same energy as 4,000 Visa card transactions, said Francois Sonnet, co-founder of the energy generation data project ElectriCChain. And Power Compare, a UK utility pricing comparison site, noted that Bitcoin energy consumption had risen by almost 30% in late 2017.
Based on that rate of growth, Bitcoin electricity consumption will overtake the US by July 2019 and the world by 2020.
This colossal amount of energy is mainly used to control the workstations containing power-hungry computers and graphics processors which do the number crunching to mine Bitcoin. Mining is the process by which blockchain transactions are substantiated and added to the public record.
Bitcoins are mined by trying and solving the same mathematical puzzle on lots of computers around the world. Every 10 minutes or so, someone solves the puzzle and gets rewarded with some Bitcoins.
Then, a new puzzle is generated, and the whole thing starts over again. Continuous block mining incentivizes people at each cycle. As the block reward becomes harder to mine, more and more energy is compulsory to carry out the calculations in this computational arms battle.
Already, the cumulative figuring power of the Bitcoin network is nearly 100,000 times larger than the world’s 500 fastest supercomputers combined. If Bitcoin miners were their own country, they would rank 61st globally for power guzzling.
By Bitcoin’s present maldeveloping rate, the electricity demanded by the cryptocurrency network will start requiring new energy-generating plants, outstripping what’s available. It will create extra stress on the grid, slowing down the transition away from the replacement of fossil fuel-based plants with renewable energy sources.
In China, the Bitcoin network is mostly fuelled by coal-fired plants, as coal-based electricity is available at very low rates there. This results in an extreme carbon footprint for each unique Bitcoin transaction, even with a conservative emission factor.
There are already a number of efforts ongoing to reform the Bitcoin network processing transactions with the hope that one day it will require less electricity, and thousands of miners will utilize other more efficient technological advances like irrigation in agriculture or outdoor LED lighting for mining Bitcoin.
Shooha Tabil is a freelance contributor.