Bitcoin eats masses of energy but how much is up for discussion.
One thing we are sure about is; it is climbing. So is the environmental cost of this currency becoming too high? It’s complicated…
Power consumption is one of the major drawbacks when it comes to Bitcoin mining. As Bitcoin grows, it requires increasingly powerful hardware to be competitive. The powerful dedicated machines crunch algorithms that record every transaction ever made and as the number increases, it gets increasingly difficult.
Miners are likely to invest in more sophisticated hardware as the value increases. Back in 2009, all this could easily be done on your desktop but now you require specialist hardware. Something like the Antminer S9 that weighs six kilos and costs a kidney – $1,100 – or even more. Not to forget the electricity bill.
Miners are spread across the globe so it is difficult to know the exact number but many people are trying to find just out how much power it is chewing up.
But, why does knowing these numbers matter? Well, if bitcoin is to grow we need to know if this is an environmentally sustainable option or not. And, if it’s just a get-rich-quick scheme then is it worth destroying our environment for?
It’s nearly impossible to know the exact numbers but a rough estimate can be observed. According to Bitcoin Energy Consumption Index, the network of computers that verify each transaction soak up about 3.4 Gigawatts.
But even this number isn’t agreed upon. Back in 2014, a pair of Irish researchers estimated the power consumption to be as high as 100MW and 10GW. But later came to the conclusion that is was somewhere in the middle to make it more plausible and realistic.
Others have picked different figures, like in 2015, researcher Hass McCook claimed that it was somewhere around 120MW, while in 2016, a paper in the International Symposium on Computer Architecture stated that the power used by ASIC clouds, purpose-built datacentres of specialized mining equipment was around 300MW and 500MW. Might as well just stick to what the paper says because it sounds legit.
The cost of cash
Though bitcoin sounds more promising as compared to traditional payment systems like gold, cash, credit cards, etc., but is it an energy hogger? All of this depends on how you pick your data.
To makes more sense, Digiconomist suggests Visa’s payment system uses the energy equivalent of 50,0000 US households to run 350 million transactions, while bitcoin uses the energy equivalent of 2.8 million US households to run 350,000 transactions a day. Visa here does more with less.
Bitcoin just might be a tool for the rich but we’re all paying the price for a system that uses 20,000 times more energy than conventional systems per transaction!
But not to forget the additional costs of printing paper notes and minting coins, branches and ATM machines and the cost of mining gold. All this included makes bitcoin usage of energy sound insignificant.
So let me ask you… is it worth it?
The value will change based on the perspective you choose and the way you think of the currency itself. Moreover, regardless of how much energy bitcoin chews up, if we start comparing it with everything that consumes energy, we will never reach any conclusion.
And though, hardware’s will continue to upgrade and claim that they use less energy as compared to previous systems, no matter how efficient they get, they will never be easier to understand. The closest we can get is an estimate because the exact number can never be achieved.