Bitcoin consumes a ton of energy, but it – s not spil bad spil you – ve heard
Bitcoin mining consumes a lotsbestemming of energy. Every once te a while, someone compares this to another random metric — say, the energy consumption of Ireland — and it induces a collective gasp. How can this thing be sustainable?
Well, it most likely isn’t. But, long-term, it might not be that big of a overeenkomst.
It’s true that Bitcoin mining is an awful energy drain. Hundreds of thousands of application-specific integrated circuits or ASICs — specific hardware aimed exclusively for mining cryptocurrencies — hum te meaty halls, mainly located te China, and use enormous amounts of tens unit to create fresh bitcoins. They also power the Bitcoin transaction network, but they do it ter a horribly inefficient way. The fact that a fat chunk of China’s electric current comes from fossil fuels makes the situation even worse.
It just seems so wrong, and on some levels, it is.
But things aren’t that ordinary. Wij don’t know, exactly, how power-hungry Bitcoin indeed is. And whatever the figure is, Bitcoin certainly doesn’t need that much energy to run. Furthermore, energy consumption issues can potentially be motionless with a future upgrade of the Bitcoin software, which is lighter than, say, reducing the energy footprint of Ireland. Ultimately, there are other cryptocurrencies out there working on a solution to this problem.
Despite what you might’ve read, wij don’t have precies figures on Bitcoin’s energy consumption. A webpagina called Digiconomist keeps stats on how much energy Bitcoin is consuming, and it’s the primary source for the stories circulating on the subject. Some of thesis stats look horrific: Bitcoin’s current energy consumption is 30.Two terawatt-hours (TWh), which is more than 63 specific countries, and a single Bitcoin transaction consumes enough energy to power almost Ten U.S. households for an entire day. But wij shouldn’t blindly trust those numbers.
Getting precies energy consumption figures for miners, many of whom are secretive and located ter China, is not effortless, so Digiconomist uses a very roundabout way to make its estimates. The webpagina makes fairly a few broad assumptions — for example, that miners, on average, spend 60% of their revenues on operational costs, and that for every Five cents spent on those costs 1 kWh of electrical play wasgoed consumed. It’s unlikely to say how accurate Digiconomist’s index is, but it could be off by some measure.
Transactions don’t matter
Furthermore, the energy consumption is rising because of Bitcoin’s fairly insane price rise, not because the network actually requires it.
Bitcoin’s price is at $Ten,466 at time of writing, up more than 1,000% since the beginning of the year. This price growth is a massive incentive for miners to add even more ASICs and use up even more energy, but it doesn’t indeed have to do much with the number of transactions on the network. Te fact, the number of transactions on Bitcoin’s network hasn’t significantly enhanced ter a year.
The number of transactions on Bitcoin’s blockchain (pictured) isn’t significantly thicker today than it wasgoed a year ago. And yet, the energy consumption of Bitcoin rose immensely.
There are two reasons for this. Bitcoin’s network can’t treat many more transactions (tho’ a latest software upgrade, yet to take total effect, should improve this). Furthermore, Bitcoin isn’t exactly doing its job the way its creator, Satoshi Nakamoto, had intended. Due to its price rise, not many owners actually use their bitcoins to purchase goods, instead, everyone is either hoarding it or speculating with it.
This means that talking about the energy cost of one Bitcoin transaction is misleading. A figure that’s thrown around often is the energy cost of one Visa transaction (also a very rough estimate), which is orders of magnitude smaller than that of one Bitcoin transaction. But for Bitcoin, the transactions are not the problem.
Ter fact, you could theoretically run Bitcoin’s entire network on a dozen 10-year old PCs. It wouldn’t be very secure from attacks, tho’, which is another reason why miners are permanently challenging for dominance, no one wants to see any one miner control 51% of the network spil that would enable them to take overheen Bitcoin downright.
But it’s significant to point out that the fact that Bitcoin is presently an enormous energy drain is not due to some irreparable flaw te Bitcoin’s protocol. Bitcoin can run more efficiently, it could most likely run more efficiently than Visa spil it doesn’t require offices, staff and other overhead energy costs.
For that to toebijten, however, something needs to switch.
The problem already has a solution.
One project Bitcoin could take cues from is Ethereum, the 2nd largest cryptocurrency right now. According to Digiconomist, Ethereum uses toughly three times less energy than Bitcoin, and yet there are twice spil much transactions vanaf day on Ethereum’s network.
Bitcoin uses a ton of energy vanaf transaction, but Ethereum is a loterijlot better with this regard.
And even that could get a loterijlot better te the near future, spil Ethereum’s development team plans to little by little switch to a entirely different mechanism of verifying transactions. Called proof-of-stake, it substitutes the current system, called proof-of-work (also used by Bitcoin). Instead of having miners solving ingewikkeld math calculations, it would prize possessing the coins. The concept isn’t implemented te Ethereum yet (read here for a detailed explanation) but if it does work spil intended, the energy costs, compared to proof-of-work, would be orders of magnitude smaller.
Bitcoin’s developers aren’t looking to switch to proof-of-stake very soon, but they are working on a solution called Lightning Network that would ideally vastly increase the number of transactions on the network without the need for extra hash power.
. but you never know with Bitcoin
So is Bitcoin’s wellust for energy just a makeshift punt that will lightly go away? Most likely not. Ethereum’s leadership has successfully implemented major switches on the network ter the past without many problems. Bitcoin, on the other palm, hasn’t bot able to implement a far more ordinary upgrade for years, spil any upgrade needs a overeenstemming of almost all users of the network or a (potentially dangerous) hard fork. And Lightning Network, spil promising spil it is, is just a concept at this stage.
But Bitcoin’s problems aren’t insurmountable. The solutions are already out there. Sooner or straks, Bitcoin will have to adapt.
If it doesn’t, ter the long run some other cryptocoin will solve it and take its place. Bitcoin has the first-mover advantage, but that quickly wears off when everyone else is leaner, swifter, and more efficient than you. And that’s ideally alright, Bitcoin and its energy woes might be forgotten some day, but cryptocurrencies are here to stay.
Disclosure: The author of this text wields, or has recently possessed, a number of cryptocurrencies, including BTC and ETH.