It has been almost a decade since Bitcoin (BTC) first came to be, sparking the era of cryptocurrencies and blockchain technology. During the last 9 years, Bitcoin has become famous and world-renowned as the foremost currency. At the same time, it became the king of cryptos, holding the most influence out of all digital assets.
As such, the asset has been subjected to both praise and criticism alike. Some see potential in it, others claim that it is distracting us from dealing with other issues. However, this time, we are going to talk about those who accuse the Bitcoin Network of consuming copious amounts of power, and who also claim that this consumption is the network’s biggest weakness.
To start off, we should point out that Bitcoin (BTC) and blockchain are still new technologies, and as such, it is far from perfect. However, any new technology ever made has been energy-intensive in its early days. This includes modern tech, like computers and data centers, but also things like trains, plains, and even cars. In time, we have found alternative solutions for all of them, and the same will happen with Bitcoin and other cryptocurrency networks eventually.
And, besides, we do have the means of producing clean, renewable energy now. The main benefit of these energies is that their production can increase if needed, but still remain eco-friendly. So, when we are focusing on the Bitcoin energy problem, the real issue is not how much energy the network is utilizing in its daily operations, but rather, it is who is producing this energy, and where is it actually coming from.
Bitcoin (BTC) Energy Consumption
Mining BTC still requires excessive amounts of power, this much is true. The mining process validates a certain set of transactions that are organized into blocks, and by donating their computing power to ‘solve’ these blocks, a miner gets rewarded with BTC. As a result of the ever-increasing difficulty factor, to accurately solve Bitcoin blocks, large amounts of energy are required.
According to some estimations, the consumption goes as high as 30 terawatt-hours per year. While this figure may not be inaccurate, as this was calculated with 2017 network statistics, this is still an exorbitant amount of power. In fact, 30 terawatt-hours per year would be enough power to sustain Ireland for a year.
And while this seems to be a lot, it is not really that high of an amount as you might think. For example, it is also estimated that the traditional finance system itself consumes over 100 terawatts per year.
Where is the Power Coming From?
While Bitcoin (BTC) truly does consume large amounts of power around the world, to be frank, it doesn’t have a substantial impact on the world. It is true that most big mining pools are located in China, which is a country that provides electricity to its consumers through coal. However, in time, a lot of other areas started exploring the mining process. The power in these areas is much cheaper, due to an increase in the production of clean energy through methods like solar, wind, hydro and geothermal.
However, the situation in China is still problematic, especially considering that China is one of the biggest contributors to carbon emissions in the world. Still, mining Bitcoin is perfectly possible in other areas as it is in China, and not all energy sources are equally damaging to the environment.
Iceland, for example, is quickly becoming one of the most popular locations for miners, with mining operations in the Nordic country solely utilizing renewable energy. This makes the power cheap, while still ensuring that the increase in power demand would prove to be no harm to the local environment at all. The same goes for Pacific Northwest, where miners still manage to make significant profits without using harmful methods of garnering electrical power.
The Real Questions We Should be Asking
Obviously, consuming large amounts of energy does not make Bitcoin inherently a bad technology. It is a new technology that has yet to be perfected, and harnessing large amounts of electricity will be handled in time. However, the real problem that remains is the use of fossil-fuel-backed fuel in mining operations. Not only that, but also the fact that new areas that use environmentally-damaging methods of creating energy are popping up all over the place, and are becoming popular Bitcoin mining hubs.
Claims that Bitcoin is responsible for large energy consumptions are all the criticisms that you will ever see on the internet. However, nobody bothers to calculate just how much of a carbon footprint Bitcoin mining is leaving behind.
The consumption of energy around the world is going up all the time, as we seem to need more and more. A recent prediction by the US Energy Information Administration claims that the next two decades will see human systems require a 28% increase in energy input. However, the increase in energy consumption does not have to be a bad thing, as long as the methods of collecting energy are not harmful to the environment.
The real problem is that people refuse to give up on coal and oil. Ironically, only the miners are actively moving towards the clean energy. Because of that, and everything else mentioned in this text, it might be a good idea to leave Bitcoin production alone, and to pay more attention to nations that still refuse to adopt clean energy production methods.