The insane levels of energy consumption required for mining bitcoins and other cryptos have been a controversial topic for some years. The computing power required to maintain the cryptocurrency, such as the underlying networks for bitcoin, currently consumes about the same amount of energy as that used by Argentina, leading to concerns over the ecological impacts of cryptocurrency. A study from Cambridge University concluded in February that the worldwide network of Bitcoin miners--operating legions of computers competing to unlock coins by solving ever-more-difficult mathematical problems--sucks in roughly as much electricity each year as the country of Argentina.
The bitcoin network uses more electrical power annually than the country of Norway, and is not too far behind that of New York State. This process requires so much energy that it is estimated the Bitcoin network uses more power than a handful of countries, including Kazakhstan and the Netherlands. As mentioned earlier, what makes Bitcoin such an energy-intensive currency is the Proof-of-Work mining process required to mint new coins.
The mining process required to create new units of bitcoin involves solving complicated, yet arbitrary, mathematical equations that currently take up vast amounts of computing power. Key Takeaways Bitcoin (BTC) and other Proof-of-Work cryptocurrencies consume large amounts of energy because of the computational demands required to mine. Whether you are for or against cryptocurrency, there is little question that bitcoins and other proof-of-work blockchains consume huge amounts of energy.
Every once in a while, commentators have gone so far as to say bitcoin will soon consume more power than the City of London. Every new computer brought online to chase the great payoff is likely to impose an energy burden, even as Bitcoin prices fall.
At this point, one bitcoin transaction uses about 70 days' worth of electricity -- really a lot of power -- the equivalent of the equivalent energy consumption of the average American household. For comparison, the Bitcoin mining network now uses roughly half the power each year of all the electronics U.S. citizens keep plugged into their homes when not using them.
Renewables provide just 28% of global electricity, so using green power by a Bitcoin mining network just means other areas of the economy cannot go carbon-neutral.
Bitcoin miners thus gravitate toward places with cheaper electricity, meaning that the root problem is not with Bitcoin, it is the shortage of inexpensive renewable power generation. Because wind energy is sometimes greater than power lines can accommodate, Bitcoin mining located close to wind farms is able to take advantage of its surplus power. Because bitcoin mining operations do not need to be turned on at all times, they work well with the intermittent nature of renewable power, according to arguments, and could pressure energy companies to ramp up renewable power capacities, while also helping balance the power grid.
The plan, in other words, is to locate bitcoin mining centers where renewable power plants are producing too much electricity at times of lower demand and absorb this surplus energy to mine. Another way Bitcoin mining could be made more sustainable, some believe, is by harnessing energy stranded or wasted, such as by harnessing the energy from flaring natural gas at oilfields for minting digital cash.
New York law, after all, allows for new Bitcoin mining to be done with clean energy, but it is not clear how mining operations will demonstrate to New York they are using renewable power. Ultimately, whether the energy used for mining bitcoin is green is a bit of an afterthought. Since fossil-fuel-fired power plants are still the dominant part of the world energy mix, bitcoin mining could be said to contribute in part to producing greenhouse gases, which are driving climate change (although, thus far, its climate impacts are much smaller than those from major players like the agricultural, building, energy, and transportation sectors).
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