While you can simply setup your account on a digital exchange, supporting cryptocurrency, to buy Bitcoin, Ethereum, Litecoin or any virtual currency of your choice ‘Mining’ is a way of getting the same currency as a reward. Cryptocurrency mining, also known as cryptomining, is the process of verifying transactions performed using cryptocurrency and recording them in the blockchain digital ledger.
Every time a cryptocurrency transaction takes place, a miner is responsible for validating the authenticity of the information and adding the transaction to the blockchain. Every miner competes with others to crack the code associated with a block containing the transaction data. The first cryptominer to perform this task by authorizing the transaction gets the reward for provision of his services. Cryptominers earn small amounts of cryptocurrency by providing their services.
That being said, the reward of mining is virtual but the energy cost is very real. According to a recent analysis published by scientific journal Nature Sustainability, on November 5, named “Quantification of energy and carbon costs for mining cryptocurrencies” cryptomining consumed more energy than mineral mining to produce an equivalent market value. A methodology was showcased in the study for calculating the minimum power required by various cryptocurrency networks and the energy consumption to produce digital assets worth one US dollar.
A time period, from January 1, 2016 to June 30, 2018, was studied and it was estimated that that mining Bitcoin, Ethereum, Litecoin and Monero consumed an average of 17, 7, 7 and 14 MJ to generate one US dollar, respectively. Conventional mining of aluminium, copper, gold, platinum and rare earth oxides consumed 122, 4, 5, 7 and 9 MJ to generate one US$, respectively, indicating that (with the exception of aluminium) cryptomining consumed more energy than mineral mining to produce an equivalent market value.
The data presented in the study also showed that the energy consumption for three digital currencies namely Bitcoin, Ethereum and Litecoin demonstrated a trend to grow with each successive year. As an example Bitcoin needed 17 MJ, in 2016 to generate one US dollar but in 2018 it consumed 19 MJ to generate the same worth. Cryptocurrencies were responsible for 3-15 million tonnes of carbon dioxide emissions, during the period of study, according to the report.
A study, published on October 29, by journal Nature Climate Change namely “Bitcoin emissions alone could push global warming above 2°C” studied the environmental impact of Bitcoin. The study referred Bitcoin as “a power hungry cryptocurrency”. It was demonstrated that if projected Bitcoin usage followed the rate of adoption of other broadly adopted technologies it could single handedly produce enough carbon dioxide emissions to elevate global warming above 2 0C in less than thirty years.
Data such as “Bitcoin Energy Consumption Index” posted on Digiconomist showed the energy consumed by mining rigs was mainly powered by coal-fired generators in China. According to BECI, each transaction requires 812 KWH translating to an annual demand of 73.12 TWH. This is around 404.89 KG of Carbon-dioxide per transaction that is pumped to the atmosphere edging the global temperature closer to the 2-percent threshold.
However Eric Masanet, from Northwestern University, stated that the recent study was “fundamentally flawed” in lieu of the fact that the global energy demand was cutting down on carbon emissions and more efficient mining rigs were being developed. Since it is based on the assumption that Bitcoin would act as a medium of exchange in the future, the study is rendered shallow as it is very much possible that cryptocurrency might become an area for investments.
There have been numerous other studies that pointed to the fact that how much energy is being consumed by the mining rigs and other blockchain based platforms which are harming the environment because energy consumed is produced by non renewable sources like energy produced by fossil fuels and burning coal reserves. It is apparently aiding greatly to global warming as well. Fortunately, there are more than few ways to harness energy using non renewable resources. and these resources if brought into use can significantly cut down on the harm that is being inflicted upon our environment. The high energy consumption in cryptomining might seem to be fatal threat but as the world is shifting to renewable energy sources, which have no adverse effects on the environment, we will witness cryptocurrencies having zero carbon emissions in the future.