The High Electric Consumption Of Bitcoin
Introduction
Bitcoin is a rage in the world of finance and economics but not many are concerned with the alarming carbon footprint of the cryptocurrency. According to official survey reports, the Bitcoin network consumes more than 143 TerraWatt hours on an annual basis. With the increase in the value of Bitcoin the power consumption of the cryptocurrency is also increasing. The process of Bitcoin mining is extremely energy-intensive. The Bitcoin miners process the transactions by the employment of complex mining machines that consume huge volumes of energy. However, Bitcoin miners do not seem to be environmentally conscious as the mining business is only expanding over time.
When Tesla decided to make investment in Bitcoin the price of the cryptocurrency shot through the roof as investors rushed in to make the best of the rising popularity and price of Bitcoin. Tesla purchased Bitcoin worth $1.5 billion making the price of Bitcoin rise so rapidly that miners began to mine more Bitcoin thereby consuming a large amount of energy. According to the researcher of The Cambridge Centre for Alternative Finance, Michel Rauchs, the only way in which the energy consumption of Bitcoin can be decreased is by decreasing the price of Bitcoin.
The environmental implications of Bitcoin mining
- Miners use specialized computers for mining Bitcoin and verifying Bitcoin transactions. The computers remain active almost round the clock thereby consuming unprecedented volumes of electric power. David Gerard, the writer of Attack of the 50 Foot Blockchain, believes that the imposition of carbon tax on the process of mining can help with reducing the consumption of electricity.
- Bitcoin mining, like the ones done by Like this trading bot refers to the extensive process of creating new Bitcoins and verifying transactions by the employment of computers to solve intricate mathematical puzzles. The decentralized network of Bitcoin also has to be mined for the verification of transactions. The software application of Bitcoin mining takes about ten minutes to produce a block on the network. In this time span of ten minutes the powerful mining machine consumes a voluminous amount of electricity. The electricity comes from the exploitation of fossil fuels that leave a terrible impact on the environment. The soaring price of Bitcoin is encouraging miners to produce more Bitcoin and attracting more members to the growing network of Bitcoin miners.
- According to reports of 2020, China was responsible for the production of more than 75% Bitcoin through a nationwide Bitcoin network. But as of today, China is no longer to be held accountable for heavy electricity consumption through Bitcoin mining. The government of China has cracked down upon Bitcoin mining and trading and has wiped out cryptocurrencies from the country. The Chinese government has banned Bitcoin mining and trading completely thereby leading to a favorable change in the dire electricity consumption scenario of Bitcoin mining.
One of the most sinister effects of Bitcoin mining is global warming. Environmentalists believe that the process of Bitcoin mining releases such an immense volume of toxic carbon dioxide that the temperature of global warming may rise by two degrees Celsius within the next thirty years or so.
According to the CoinShares report of 2019, almost 74.1% of the electric power consumed by Bitcoin comes from renewable sources of energy. At present, petroleum corporations are seeking ways to provide Bitcoin mining rigs with energy from gas flares that gets wasted otherwise. Some of the mining firms are shifting from centers of non-renewable energy to centers of renewable energy in order to reduce the carbon print and make the process of mining more environmentally-friendly.
Conclusion
Bitcoin mining can be detrimental for the environment. It not only depletes the limited supply of fossil fuel but also releases an excessive amount of carbon dioxide. Moreover, what makes Bitcoin mining more toxic is the generation of tons of electronic waste every year. The idea of imposing a carbon tax may be beneficial and the use of renewable sources of energy like hydel and solar power instead of fossil fuels and coal may help to make Bitcoin mining eco-friendly.