A new study authored by Alex de Vries and published in Science Direct forecasts that Bitcoin mining will comprise 0.5% of total global electricity consumption by the end of 2018, and is currently consuming 2.5 GigaWatts. This is the first scientific peer-reviewed paper on Bitcoin mining energy usage, and the author hopes this study will be the impetus for getting the conversation started on the best way to handle this problem in the future.
Bitcoin is the most popular cryptocurrency in the world with a market cap of USD 137 billion and trading volume of several billion dollars per day as of this writing. It uses the proof of work (PoW) algorithm where computers cryptographically hash transactions and organize them into blocks, which are added to the blockchain in order to maintain and secure the network. Computers that participate in PoW calculations are called Bitcoin miners, and they receive Bitcoin for their efforts.
Mining Bitcoin has become an extremely popular way to earn Bitcoin, and the amount of processing power used to has snowballed. As more computers mine, each computer already mining Bitcoin receives less income, causing the people to buy more mining machines so that they remain competitive. This has turned into a self-sustaining positive feedback loop that has led to exponential growth of the Bitcoin mining hash rate.
Currently, over 32 million TH/s of processing power is maintaining and securing the Bitcoin network. This uses a tremendous 67 TWh of electricity per year, which is enough to power 6.2 million US households, and is approximately the same amount of electricity that the Czech Republic uses annually.
Fossil fuels burned for Bitcoin mining releases 33,000 kilotons of carbon dioxide into the atmosphere per year, which is contributing to global warming, not to mention the damage from other toxic pollutants that are released into the environment when burning fuel.
This environmental damage that Bitcoin mining is causing has brought up the question if there is a more energy efficient way to maintain and secure the Bitcoin network. One answer lies in switching to Proof-of-Stake (PoS) mining, which some believe is just as secure as PoW but uses almost no electricity in comparison. Any changes to the Bitcoin protocol are met with extreme controversy, however, and this is unlikely to happen. Miners would be particularly opposed, considering that PoW provides such a large amount of money to Bitcoin miners, and switching to PoS would take away their income and make all their mining rigs obsolete.
Bitcoin mining hash rate and electricity usage will continue to rise until the point is reached that the revenue earned from Bitcoin mining equals the amount spent on equipment plus electricity. Currently, Bitcoin electricity usage is more than doubling every year.
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