Argentina, Finland, Malaysia – what do all these countries have in common? Well, according to researchers, they consume as much electricity per year as Bitcoin mining. Even Bill Gates who is known for his environmental conscience, claims that Bitcoin managed to do what no other currency could (in the bad sense) – that is, to achieve the highest power consumption per one transaction.
Bitcoin is booming again as never before, breaking the historical all-time highs and getting dangerously close to $100,000 per unit. Consecutively, the higher is the demand, the more power the miners have to exploit in order to write more and more blocks into the blockchain. The need to put more effort into mining is directly proportional to the growing difficulty of the proof-of-work algorithm.
So, is there an end to the increasing electricity consumption and therefore, carbon footprint caused by Bitcoin? Can Bitcoin become entirely green? Let’s address these issues and try to find the answer.
The obstacles to Bitcoin going green
Despite the fact that China banned crypto mining and trading altogether, researchers still point out that Chinese bitcoins stand in the way of totally eco-friendly PoW (proof of work). China is a country rich in coal and lots of the plants and fabrics on its territory indeed use coal to function. These sources of energy are also the cheapest. Researchers claim that if the production of Bitcoin won’t stop in regions like Xinjiang, the power consumption of mining will soon be equal to that of London.
The problem is that most of the mining farms across the world are using the traditional sources of power as well, which is why the carbon footprint for Bitcoin only grows. Mining farms include hundreds or even thousands of machines stacked together and heavily cooled for the sake of their relentless operation. Professional farms have to perform around 150 quintillion operations per one second of time in order to be able to compete with other ones and be the first to write blocks into the Bitcoin Blockchain.
Of course, renewable sources of power would be the answer to the concern with the oldest cryptocurrency. But they would be too expensive to build for most of the miners at the moment.
The Opportunities of “Green Bitcoin”
One of the opportunities to decrease the carbon footprint of Bitcoin in the nearest future is more obvious than it seemed to be. If the world’s society would decrease the use of Bitcoins, the difficulty of mining would fall, and miners wouldn’t have to spend so much energy on minting BTC.
One of the ways to do it is to switch to other cryptocurrencies. For example, many traders right now are trying to figure out how and where to sell Ripple now rather than just sticking to Bitcoin as if it was the only option available in the market. Truth is, Bitcoin does grow but the percentages of its growth are relatively small. At the same time, other tokens which might be cheap, might also rise thousands of percent overnight and their investors will gain the much-desired profit.
When one of the regions of China cut down its mining farms, the has rate decreased by nearly a half. As a result, the difficulty decreased too, and the power consumption of Bitcoin became much lower. These days, the observed Bitcoin power consumption decreased to only 70 terawatt-hours annually. That’s nearly equivalent to the consumption of countries like Chile and Bangladesh and is roughly 0.33% of the world’s total electricity production.
Also, the shutdown of Beijing’s mining rigs led to one interesting conclusion drawn by the experts. It turns out, that Chinese mining rigs mostly included cheap and outdated hardware that consumed a lot of energy but brought mediocre results. Most of that hardware is never coming back. And this means a good sign for the whole mining community. Miners in other countries claim that they have more up-to-date hardware and software which allows them to perform more operations for certain timeframes, meanwhile consuming less energy than it would require for the same amount of operations before.
So we might suggest that if the technology of mining continues evolving, miners will need less power for more operations and that will decrease the overall carbon emissions caused by Bitcoin in the long-term perspective.
Electricity power consumption is a thing that on one hand, drives Bitcoin forward, and on the other hand, becomes the obstacle to its development and further adoption. Miners are incentivized to switch to the cheapest sources of electricity in order to stay competitive in the market because that’s their biggest expense.
Since “green” sources of power are expensive to integrate, not all miners can afford to jump right into it. Although, in a long run, renewable sources of energy would be much more efficient and cheaper than the older ones.
Experts point out that energy use is not equivalent to the carbon footprint. While it’s easy to measure how much energy does Bitcoin require to keep operating, it’s much harder to calculate the exact amount of emissions that it causes. And while the new energy sources installation might turn out costly, the actual price for the electricity might even be less than that of coil and gas, as you can see from the latest report. Also, researchers say that the overall tendency for the cost of renewables represents the downward movement. In other words, renewables have a tendency to become cheaper. At the end of the day, new miners are also looking for opportunities to attract investors or even go public to help them grow.