Bitcoin mining is the backbone of the cryptocurrency ecosystem and is also a billion-dollar industry that has expanded alongside the growing trend of digital currencies. Mining for bitcoin can be a pretty profitable endeavor on a large scale, and as such, many major mining companies and pools have sprung up over the years.
Minting new BTC is a heavy computational process that gets heavier with the increase in load on the network. In order to provide the required amount of processing power, special types of pieces of equipment called ASICs, are used. This equipment consumes a lot of electricity, and hence the entire process is a power-hungry one. This is the reason why Bitcoin mining is often criticized for its high energy use and potentially harmful impact on the environment.
New findings claim Bitcoin Mining is wasting electricity
In a detailed assessment, Alex De Vries, a blockchain expert at accounting firm PriceWaterhouseCoopers and founder of Digiconomist, has pointed out that bitcoin mining has touched new heights in terms of power consumption. De Vries’ calculations are derived from Digiconomist’s Bitcoin Electricity Consumption Index (BECI), and the latest figure is clocked at 77.78 Terawatt hours per year.
To make this simpler, De Vries states that a single Bitcoin transaction expends the same quantity of electricity needed to power a British household for 22 days, 780,650 Visa transactions, or 52,043 hours of video streaming on YouTube.
Furthermore, the BECI claims that BTC mining results in e-waste generation which is roughly close to that of Luxembourg and a carbon footprint that can be compared with the entire carbon footprint of New Zealand.
To make matters worse, De Vries asserts that only 2% of devices used are able to actually verify the transactions on the blockchain. According to him, 98% of these costly pieces of equipment are “just participating in a massive lottery and every 10 minutes one gets lucky and gets to produce the next block.” He further explained in details:
“The shocking thing is the average lifetime of a bitcoin mining machine is one and a half years because we have a new generation of machines which are better at doing these calculations. That means it’s impossible for 98 percent of the devices during their lifetime to make the calculation that actually results in a reward. So the rest is just running pointlessly for a few years, using up energy, and producing heat, and then they will just get trashed because they can’t be repurposed. It’s insane.”
Miners rely on excess and green energy
However, De Vries’s findings are contradicted by a report from the investment company Coinshares. The firm’s December 2019 report states that 73% of the electricity used to power the Bitcoin network comes from renewable sources, two-thirds of which is located in China. Christopher Bendiksen, head of research at CoinShares stated:
“Our current approximate percentage of renewable power generation in the Bitcoin mining energy mix stands at 74.1%, more than four times more renewable usage than the global average energy mix.”
The report from De Vries also fails to consider the fact that in many cases, the energy used to power mining farms comes from a surplus of energy that would otherwise be wasted since it’s not possible to store all the energy produced. On this matter, Andreas Antonopolous, cryptocurrency author and advocate has argued that cryptocurrency mining actually takes advantage of excess renewable energy and prevents loss. He said:
“What happens when you build a 50-megawatt plant in a place where they only have 15 megawatts of demand? In some cases, if it’s alternative energy, like wind, solar, or hydro, you can’t turn it off or turn it down. You’ve built it, and it will produce, and then what? You’re basically wasting energy. Now, what if, in that environment, you can find a way to turn that energy into an alternative store of value […] by using electricity that would be otherwise wasted. Now, Bitcoin is an environmental subsidy to alternative energy all around the world.”