Bitcoin, the decentralized cryptocurrency that is "disrupting" the financial sector these days, actually has an impact on our planet, a physical impact to be precise. No, we are not talking about its potential applications in our daily lives. We are referring to Bitcoin's electricity consumption, which is so huge it can compared to that of countries.
As you might already know, new Bitcoins are generated through a process called mining. Basically, mining is a computational operation in which miners are asked to solve a complex mathematical problem, and are in turn given a certain amount of bitcoins as a reward for their efforts. Beside issuing new Bitcoins, the apparent goal of mining is the addition of transaction records to the blockchain. The blockchain serves as a perpetual public ledger of all bitcoin transactions since its inception in 2009. In order for transactions to be counted as valid and thus authentic, Bitcoin employs a complex mechanism called Proof-Of-Work, or PoW. We will not elaborate on PoW any further, because it is outside the scope of this article. What you need to retain though, is that adding transactions to the blockchain requires a lot of computational power. A huge amount of computational power also translates to a colossal electricity consumption, which begs the question: how much energy does Bitcoin's mining actually consume?
According to digiconomist.net, Bitcoin's annual energy consumption has reached a staggering 48.82 TWh. To put things into perspective, Bitcoin's annual electricity consumption is equivalent to that of Singapore. If that wasn't enough, Nebraska's annual electricity consumption is close to 31 TWh, which roughly represents about two thirds of Bitcoin's electricity use. Having a huge electricity bill also implies a big carbon footprint, since most of Bitcoin's mining takes place in China, where electricity is typically generated using coal plants. Moreover, and always according to same source, Bitcoin's annual carbon footprint was evaluated at around 24,000 (kt of CO2). Again, if we take the country of Azerbaijan as an example, then the total CO2 emissions of Bitcoin's mining would make up a whopping 63% of that country's total yearly emissions!
To conclude, Bitcoin's PoW mining algorithm might be an innovative way to issue new coins, while at same time protecting the integrity of the blockchain, but this process has reached a point where it is slowly becoming unsustainable in the long term. That is why a lot of critics are calling for alternative solutions to tackle this problem. Some cryptocurrencies have even gone as far as to choose a more energy-efficient approach like a Proof-Of-Stake methodology (e.g., Lisk).
According to digiconomist.net, Bitcoin's annual energy consumption has reached a staggering 48.82 TWh. To put things into perspective, Bitcoin's annual electricity consumption is equivalent to that of Singapore. If that wasn't enough, Nebraska's annual electricity consumption is close to 31 TWh, which roughly represents about two thirds of Bitcoin's electricity use. Having a huge electricity bill also implies a big carbon footprint, since most of Bitcoin's mining takes place in China, where electricity is typically generated using coal plants. Moreover, and always according to same source, Bitcoin's annual carbon footprint was evaluated at around 24,000 (kt of CO2). Again, if we take the country of Azerbaijan as an example, then the total CO2 emissions of Bitcoin's mining would make up a whopping 63% of that country's total yearly emissions!
To conclude, Bitcoin's PoW mining algorithm might be an innovative way to issue new coins, while at same time protecting the integrity of the blockchain, but this process has reached a point where it is slowly becoming unsustainable in the long term. That is why a lot of critics are calling for alternative solutions to tackle this problem. Some cryptocurrencies have even gone as far as to choose a more energy-efficient approach like a Proof-Of-Stake methodology (e.g., Lisk).
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