The rise in the price of bitcoin has made people think seriously about the devastating environmental consequences of this unique financial phenomenon. They were talked about back in 2013 by Australian environmental sustainability analyst and entrepreneur Guy Lane. In recent months, the bitcoin bubble has grown much larger, and the associated energy costs have become widely known.
Creating (“mining”, mining) bitcoin requires complex calculations that have no value, except that they have to be done publicly. According to the latest estimates, Bitcoin mining requires the same amount of energy as the whole of New Zealand, and maybe even more. If the trend is allowed to continue unchecked in our ecologically plagued world, bitcoins will become an ecological disaster.
In the early days of bitcoin, all the necessary calculations were done on simple personal computers. But now miners use specially built machines that are optimized for the special algorithms of bitcoin. The cost of "mining" is equal to the cost of electricity used. The only way to mine profitably is to have access to the cheapest electricity. And this is electricity, which is produced by burning cheap coal in old stations. Bitcoin mining today is concentrated in China, which is still heavily dependent on coal.
How much energy does Bitcoin use?
The bitcoin network now uses about 30 terawatt hours per year, or 0.1% of all global energy consumption - more than individual consumption in more than 150 countries.
The price of electricity is about 5 cents per kilowatt-hour for industrial users. Miners with higher prices tend to go out of business. If the price of electricity is 5 cents per kilowatt-hour, and the price of bitcoin (let's say) is 10 thousand US dollars, then each bitcoin consumes about 150 megawatt-hours of electricity. Under current regulations, bitcoin tinctures allow for 1,800 bitcoins to be mined per day, which translates to 24,000 megawatt hours of daily use, or about 100 terawatt hours per year, almost 0.3% of global electricity use.
Each megawatt-hour of coal energy is accompanied by a ton of carbon dioxide emissions, so a terawatt-hour corresponds to a million tonnes of CO₂.
If the mining price continues to be so high, the total annual energy use from Bitcoin mining is likely to rise to 100 terawatt hours.
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The transition of the entire global financial system to bitcoin will lead to an increase in the use of electricity in the world by about 500%. Given the current threat of climate change, this is an unimaginably huge amount of energy consumption.