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In recent years, Cryptocurrency has risen in popularity, raising the concept of decentralized digital transactions and driving the value of all crypto.
However, when Elon Musk revealed in May 2021 that Tesla has paused Bitcoin vehicle purchases due to his concerns about its environmental impact, issues regarding the energy-intensive component of crypto mining were soon raised.
How Much Energy Does Bitcoin Mining Consume?
Mining Bitcoin and other cryptocurrencies consume a lot of energy and generate a lot of heat, with Bitcoin mining alone consuming more electricity than Argentina do in a year.
In this article, we are discussing, How Much Energy Does Bitcoin Mining Consume? There’s a lot of enthusiasm and interest in this new era of NFTs and digital currencies about how current digital assets are building the currency of the future.
While many people like the exciting highs and unexpected low downs of bitcoin, there is a lesser-known component of cryptocurrency that has a significant environmental impact.
This is the actual amount of electricity required to run the Bitcoin network. Bitcoin is a decentralized digital currency with its own blockchain network. Bitcoin’s large carbon footprint is due to its decentralized structure, which necessitates a network of computers to solve complicated math problems in order to validate transactions.
Bitcoin Mining and Proof-of-Work
This is the base of cryptocurrency, which is built on the “Proof-of-Work” system. These computers begin what is known as Bitcoin mining, with the network of computers providing the platform for updating the blockchain or public ledger of Bitcoin transactions.
Miners are required to solve numerical problems with a 64-digit hexadecimal solution known as a hash in order to verify Bitcoin transactions. This hash is entered into a public ledger that verifies the Bitcoin transaction. Miners may be rewarded with Bitcoins if they arrive at the solution faster.
A reward of 6.2 Bitcoins, or more than $200,000, is given to the computer that solves the problem. With the development of Bitcoin transactions and Crypto going mainstream, as well as other cryptocurrencies that use similar mining technology requirements, a slew of Bitcoin mining operations have sprung up throughout the world.
Crypto Mining Farms and Rigs
Miners can scale up their hash rate by filling warehouses with computers, increasing the number of hashes produced per second, resulting in more Bitcoins being earned by these businesses.
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And, in order to achieve a higher hash rate, even more, electricity is required to run these facilities, which frequently exceeds the electrical capacity of local infrastructure.
Individual miners would set up expensive computers to start the process in the early days of crypto, but now, more and more computers are required to run a profitable crypto mining enterprise.
The majority of these Crypto Mining Rigs are barebones computers with numerous Graphics Cards or GPUs. These powerful GPUs are capable of handling complex calculations and require high-wattage power supplies. Mining rigs have graphic cards that work 24 hours a day, seven days a week.
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A single mining system with three GPUs can take up to 1,000 watts of power, which is about equivalent to running a medium-sized window air conditioner all day. And that’s just from one PC.
Crypto mining operations can include hundreds or thousands of rigs in a single location, such as Kazakhstan’s mining center, which has over 50,000 rigs. It takes a lot of energy to run crypto-mining plants.
The yearly power usage of the Bitcoin network was expected to be 129 terawatt-hours in March 2021, placing Bitcoin operations 29th in terms of annual energy consumption if it were a country.
Bitcoin Uses More Electricity Than Many Countries
Bitcoin activities are currently consuming more energy than Argentina, Norway, or Bangladesh combined. Apart from consuming a lot of energy, these mining rigs also produce a lot of heat. The more rigs there are, the hotter it becomes.
To keep rigs from melting, mining operations use several built-in computer fans as well as external cooling devices. The requirement for these cooling systems alone necessitates considerably more electricity, increasing the mining facilities’ overall energy usage.
According to research, one Bitcoin transaction takes 1,544 kilowatt-hours to execute, which is roughly 53 days of electricity for the average US home. This indicates that each Bitcoin transaction would result in energy bills totaling more than $200.
When you consider the number of transactions that are actually made, as well as the energy needed by mining operations to verify transactions, you can see that the Bitcoin network has significant energy consumption.
And, with such a large energy demand, these mining facilities are relying on local infrastructure to meet their energy needs, which are often far greater than what these local power suppliers can supply. This is why Bitcoin mining has become a significant environmental concern.
Fossil fuels account for more than 60% of all energy sources in the United States. Natural gas and coal account for the majority of this, with these two being among the leading sources of carbon dioxide emissions into the atmosphere, where it absorbs heat from the sun and generates the greenhouse effect, contributing significantly to climate change and Global Warming.
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As mining rigs consume more energy, surrounding power plants must create more electricity to meet these demands, resulting in the burning of more fossil fuels.
As previously stated, Bitcoin operations consume 129 terawatt-hours of energy, and to put that in perspective, one gigawatt-hour of power requires around one million pounds of coal. That means you’d need a lot more than that to meet Bitcoin’s current energy requirements.
This is one of the reasons why some people have expressed their reservations and are urging crypto to find greener ways to run its operations.
Apart from Elon Musk’s decision to discontinue Tesla’s Bitcoin payment acceptance, governments and other regulators are focusing on the crypto industry’s carbon footprint.
Making Cryptocurrency More Environmental
This is really a good thing, as it pushes Bitcoin toward more environmentally friendly alternatives like Hydroelectric Power, which is used by at least 60% of crypto mining facilities throughout the world. Clustering crypto mining operations near existing renewable energy projects can also help to alleviate a common problem: an oversupply of electricity.
Blockchain entrepreneurs believe that in the near future, a greener model for crypto mining will emerge, allowing for faster payback on solar and wind project investments, as crypto mining facilities would solve the problem of solar and wind producing too much energy for a specific area’s grid, which would otherwise be wasted.
The greatest method to make cryptocurrency mining more environmentally friendly is to support policies that encourage mining in areas where energy resources are currently underutilized. There’s also a push to replace Bitcoin’s existing “Proof-of-Work” system with a “Proof-of-Stake” system.
Proof of stake requires miners to front a small amount of cryptocurrency to be entered into a lottery for the chance to verify transactions and removes the competitive computational element of proof of work.
This saves energy by allowing mining rigs to focus on a single problem at a time, as opposed to an array of machines rushing against each other to solve the same problem and wasting tons of energy while at it.
Other cryptocurrencies, such as Ethereum, are already planning to switch to a proof-of-stake method, which can significantly lower energy consumption by 99.5 percent.
If Bitcoin is to maintain its position as the world’s most popular cryptocurrency, it must address these energy consumption and operation concerns, which have all become issues for the first digital currency, if only to appease its merchants and the general public, but also to aid the ongoing push toward mainstream cryptocurrency acceptance.
What are your thoughts on Bitcoin mining consuming so much energy? Please leave a comment below letting us know what you think.