With every dawning day, Bitcoin is becoming more popular as more people continue to embrace it as an alternate form of the cashless payment system. Plenty of online portals, from online shopping websites to gaming platforms like the online casino Canada and online video gaming stores, are starting to accept this digital currency. However, as the adoption continues, many questions have been raised, particularly regarding mining sustainability.
Bitcoin has been dubbed ‘Gold 2.0’ for various reasons. For one, both gold and Bitcoin have a limited supply since there’s only a specific amount to go around. Secondly, although we have seen the value of Bitcoin fluctuate and even hit an all-time low in 2018, the two confidential stores of value hold pretty well in times of volatility as other currencies crash. As a result, the two have both been considered a haven when there is severe market turbulence. Another commonality is that they are both mined using different equipment and methods, which in the literal sense have nothing in common except consuming vast amounts of energy.
What the Numbers Say
The process of mining, milling, smelting, and refining gold consumes more electricity (approximately 240 Terawatt-hours per year) than Bitcoin mining. Even so, the complaints on Bitcoin’s energy use are increasing by the day. From this, it’s clear that there is still a disparity in the preferred store of value. Global Bitcoin mining consumes more energy than the majority of all countries, a fact that has created contention between Bitcoin defenders and critics.
According to Statista, the Bitcoin network consumes about 143 Terawatt-hours of electricity annually as of September 2021. This is an alarming figure as it’s equivalent to a small country’s consumption and 90% more than that consumed by Google’s multiple data centers combined. The question that keeps popping up is whether all the energy used on this one activity is worth it. Another concern is the effect of non-renewable energy consumption on the already dire global carbon footprint.
Transaction Validation and Energy Consumption
Let’s consider how Bitcoin mining works and why the gargantuan thirst for energy is creating a buzz around sustainability circles. Simply put, like other crypto-mining, Bitcoin mining entails verifying and validating new transactions, a process that needs to have guaranteed security that prevents the ‘double spending.’ This can be facilitated by providing ‘proof of work’ – an algorithm that can achieve a consensus between multiple nodes on the Blockchain.
To realize a consensus, all nodes must solve a complex cryptographic math puzzle that high-powered computers owned by miners usually compute. This is essentially a race of who will be the first to solve the mathematical equation, and the winner gets a miner reward.
The Proof-of-Work mechanism gives an incentive for miners to acquire the best possible equipment in large quantities in a bid to have the highest hashrate against competitors. As a result, some miners have set up large mining farms or joined forces to create mining pools with thousands of machines to increase their hashrates. The massive equipment, storage, and cooling requirements have, in turn, led to greater energy consumption.
Wasteful or Solution to Utilization of Excess Energy?
There are two schools of thought on whether Bitcoin mining is wasteful and contributes to climate change and other effects caused by carbon emissions. On the one hand, mining defenders claim that the current banking system, which consumes way more energy than Bitcoin, is less sustainable since Bitcoin requires fewer resources.
As we watch the world’s household energy consumption get more efficient by the day, some countries are now producing more energy than can be consumed in their region. This means that while the network may have a continually increasing energy demand, initiatives are being put in place for energy to be salvaged from sources where it would have otherwise been lost.
On the other hand, critics have raised concerns about the number of graphics cards being destroyed every second in the race to solve the complex equations been thrown at the network. This exponentially adds to the mining carbon footprint. Ultimately, the value one places on Bitcoin will determine what side one will be on.
A Change of Strategy for Miners
In the past, mining companies have been operating in countries like China, where electricity is considered cheap regardless of energy sources to maximize profits. However, due to the concerns about energy sources and environmental impact, they are now moving their operations to countries with excess electricity like Canada. Whether this will sort some of the contentions around carbon-neutral mining remains to be seen.
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