Bitcoin’s energy consumption
- Posted By
10Pointer
- Categories
Economy
- Published
19th May, 2021
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Context
Cambridge Bitcoin Electricity Consumption Index (CBECI) shows that Bitcoin emit a huge amount of the carbon through mining and Tesla has also announced that it will not accept bitcoin for its car purchase.
About the Energy Consumption status of Bitcoin
- Obtaining bitcoin is an energy intensive endeavor.
- The chart released by the CBECI showed the evolution of its power usage, rising constantly from 2016 and accelerating sharply in 2020.
- Bitcoin currently consumes around 110 Terawatt Hours per year, 0.55% of global electricity production, or roughly equivalent to the annual energy draw of small countries like Malaysia or Sweden.
- The IEA predicts the situation could worsen if miners used the most energy intensive equipment, their consumption could rise to 500 TWh.
- A terawatt-hour is a unit of energy equal to outputting one trillion watts for one hour. It is equal to 3.6x1015 Joules.
- This value is large enough to express annual electricity generation for entire countries
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How the energy is consumed in Bitcoin generation?
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The cryptocurrency is earned by participants in the network called "miners," who solve deliberately complicated equations using brute force processing power under the so-called "proof of work" protocol.
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Proof of work" was one of the founding principles of the best-known cryptocurrency, created in 2008 by an anonymous person or group that wanted a decentralized digital currency.
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During the mining process a huge amount of energy is consumed.
Proof of work (PoW)
- It is a decentralized consensus mechanism that requires members of a network to expend effort solving an arbitrary mathematical puzzle to prevent anybody from gaming the system.
- Proof of work is used widely in cryptocurrency mining, for validating transactions and mining new tokens.
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- The system is designed so that around every 10 minutes, the network awards some bitcoin to those who have successfully cracked the puzzle.
Environment impact
- The high energy consumption would lead to higher Carbon emission.
- Emissions from mining could compromise the country's climate goals especially those countries which relies on a particularly polluting type of coal, lignite, to power some of its mining.
- For example Bloomberg predicts that it will take until 2060 before China can meet its cryptocurrency industry's needs through renewable energy.
Cambridge Bitcoin Electricity Consumption Index (CBECI)
- The Cambridge Centre for Alternative Finance launches a new real-time index tracking the total electricity consumption of the Bitcoin network.
- The index provides a real-time estimate of the total annual electricity usage of the Bitcoin network and enables live comparisons with alternative electricity uses in order to put numbers into perspective.
- The index has been developed in response to growing concerns over the sustainability and environmental impact of Bitcoin mining, which relies on computation-heavy cryptographic operations that require significant amounts of electricity.
- Reliable estimates of Bitcoin’s electricity usage are rare: in most cases, they only provide a one-time snapshot and the numbers often show substantial discrepancies from one model to another.
- The CBECI provides a neutral and objective platform for reliable information on Bitcoin’s electricity consumption for use by policymakers, regulators, researchers, the media and others.
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