Does Bitcoin Mining Really Need to Go Green?
As of today, the Bitcoin mining industry uses more energy than it produces and has gotten worse over the years. This is due to rapidly increasing power consumption required to keep up with the current level of network activity and significant increases in the hash rate per unit of new hardware.
Nowadays, running a Bitcoin miner requires as much electricity as several households do. In fact, one computer running even just one or two hours every day can easily use an additional 80 kWh yearly. Although this may not sound like a lot on paper, imagine what I mean when you need to pay for that electricity bill next month.
The energy consumption required for bitcoin mining is really quite surprising. With the price of Bitcoin rising rapidly, it drives up the energy consumption for running a mining rig. But the real question is, does bitcoin mining really need to go green? In this post we'll answer that question by looking at what's needed to run a Bitcoin mining operation today and how much electricity you would use if you were to mine on an eco-friendly computer.
Green energy has become the buzzword in the green movement. From powering our homes, to storing data and computing processing, to powering vehicles and aeroplanes, we've made a conscious effort to use more green energy sources. In an effort to meet this goal of using more green energy sources, many people have started looking into Bitcoin mining as one way to do so.
As bitcoin mining continues to go green, the industry is finding ways to shave off precious energy and save time. The technology used in this process – called Application-Specific Integrated Circuits (ASICs) — is what started it all years ago when people were first experimenting with ways to find new blocks in their hunt for bitcoins.
The power consumption itself has been a concern ever since, but some miners have stepped up to the plate with more efficient solutions that focus on lowering energy consumption by utilising alternative sources of power such as renewable energy.
Bitcoin Mining and Electricity Consumption
According to The Digiconomist's Bitcoin Energy Consumption Index, it takes 1,449 kWh, or around 50 days of typical US household electricity, to conduct one bitcoin transaction. In terms of dollars, the US average cost per kWh is close to 12 cents. Therefore, a bitcoin transaction would result in a roughly $173 energy bill.
According to the Bitcoin Energy Consumption Index, bitcoin mining consumes roughly as much energy as Argentina, and at an annual level of 131.26 terawatt-hours, crypto mining would rank among the top 30 energy-consuming nations. More than 200 terawatt-hours of energy were used for bitcoin mining at its peak between the end of 2021 and the beginning of 2022.
Impact of Bitcoin Mining on Environment
We must first understand how new coins are created in a cryptocurrency in order to understand how cryptocurrencies affect the ecosystem. The blockchain depends on people to validate transactions and add fresh blocks of data because cryptocurrencies aren't subject to centralised regulation.
These blockchains must be extremely challenging and expensive to validate in order to defend against malicious actors trying to misuse this additional information. As a result, proof of work was added to the majority of cryptocurrencies.
By resolving a challenging mathematical puzzle, users can validate cryptocurrency transactions via the proof of work consensus technique. The transaction is validated and a predetermined amount of cryptocurrency is given to the first individual who completes the puzzle. Then the cycle resumes. The most popular consensus process is this one.
When a user "mines" bitcoin, their computer is actually executing programs that are attempting to solve the puzzle. Your chances of being chosen to update the blockchain and receive prizes increase with the processing capacity of your machine. Therefore, in order to outperform their rivals, miners are motivated to increase the power behind their mining operations.
To further maximise processing resources towards solving these proof-of-work difficulties, application-specific integrated circuit (ASIC) miners, extremely powerful processors designed with the express goal of mining a specific cryptocurrency algorithm, were developed. ASIC miners can be used to mine any cryptocurrency, but given how fierce the competition is right now, they are now absolutely necessary for mining Bitcoin.
Bitcoin Mining is Naturally Gravitate to Green Energy
A survey released in January by the Bitcoin Mining Council anticipated that by Q4 2021, 58.5% of the world's bitcoin mining operations would be powered by renewable energy.
The preference for clean energy is brought on by a combination of political pressure, concern for the environment, and a focus on the bottom line. It's causing a sea change that might have repercussions for the world's electrical grid systems that go far beyond Bitcoin mining.
Because Norway has access to hydropower and other renewable energy sources, bitcoin mining there is cleaner than almost everywhere else on the planet. In actuality, renewable energy sources provide for all of Norway's electricity production.
The cryptocurrency industry is already making serious attempts to be sustainable. For instance, the Crypto Climate Accord, which aims to have all blockchains powered by renewable energy by 2030, was just announced by over 200 businesses and individuals.
Furthermore, according to a CoinShares study, as much as 74% of the energy used by Bitcoin worldwide in 2019 came from renewable sources, such as Chinese hydropower. By the end of 2021, Bitcoin mining was powered by about 58.5% renewable energy worldwide, per research done by the Bitcoin Mining Council in January 2022.
The Norwegian government has revealed their strategy for completely eco-friendly bitcoin mining. This is made feasible by Norway's availability to a variety of renewable energy sources, which account for all of the country's capacity for energy generation.
Although the energy that cryptocurrencies like Bitcoin require is being used effectively, as global acceptance of cryptocurrencies rises, the cryptocurrency industry must embrace sustainability like all other industries. Cryptocurrency's existence in the mainstream is further stabilised by bitcoin mining, which is already progressing favourably.