Bitcoin’s High Energy Consumption Problem

Bitcoin’s High Energy Consumption Problem: The crowd of crypto fanatics recently took a turn when former cheerleader Elon Musk expressed concern about the environmental cost of bitcoin. “Cryptocurrency is a good idea on many levels,” read a statement shared on his Twitter feed. “We believe it has a promising future – but it may not come at a great cost to the environment.”

So how bad is bitcoin for the planet? And does Musk’s radical U-turn mark the beginning of the end for the crypto revolution? Join us on the mines’ journey to take an undisturbed look at the energy consumption of bitcoin.

You’d be forgiven for thinking ‘Wait, bitcoin is weird fake internet money, isn’t it? How on earth does it even have a carbon footprint?’

Traditional tender, like banknotes printed on hacked forests or shiny coins minted on coarse extruded gold, should instinctively be worse for the environment, right?

To understand how it’s a bit more complicated than that, let’s look at the fundamental puzzle bitcoin sets out to solve. All digital currencies have, at some stage during their development, run up against the so-called ‘double spend problem’.

If I want to buy a car, such as using shady internet money, it is impossible for the car seller to know that I am not using the same shady internet money to buy a boat together.

If I can somehow convince both the boat and the car seller that both transactions are valid, I will get both a car and a boat and will be a hundred miles away before anyone knows they have happened. . With traditional credit cards, all transactions are logged and verified centrally.

This means you can’t spend the same money twice, or Visa will tax you in it. However, bitcoin is different. It strives to be decentralized above all. Bitcoin creator Satoshi Nakamoto‘s biggest stroke of genius was developing the blockchain.

Instead of some all-powerful central bank, networks around the world race to verify the validity of all recent bitcoin transactions by solving computers, or ‘hashing’ elaborate math puzzles.

When a lucky computer somewhere on Earth shuts it down, a verified record of the most recent bitcoin transaction is created – a ‘block’ – which joins all previous blocks – a ‘blockchain’ – which is then copied. is done and shared around the network. Everyone’s trusted decentralized ledger

bitcoin movements. No one person can directly tamper with the blockchain. which is the basis of all its value. Back to our example. Whichever transaction – car or boat – is verified in the first hashing feeding frenzy wins, while the second is automatically rejected.

And any computer on the network has won the race to verify that a block of transactions is rewarded – at the time of writing – with 6.25 bitcoins. It’s worth about $283,000 to the lucky owner of that computer.

And there’s no double expense insight. That subtle, complex verification mechanism – known as ‘proof of work’ – is certainly effective in keeping the blockchain under control. The trouble is that it consumes a huge amount of computing horsepower.

In order to maximize your chances of solving the hash and collecting those 6.25 bitcoins, it makes sense for you, the miner, to house computers in huge scary server farms by greedy hashing hundreds of nights and nights.

The more computers that run, statistically, the more likely they are to be successful. And even though energy bills are skyrocketing, they are more than offset by the rising value of bitcoin. Large farms run several thousand computers – technically graphics cards.

All but one of those hardworking graphics cards will fail on the attempt, but – and this is important – each one is still burning energy in the effort. this is the problem. how much energy

As interest in bitcoin grows, bitcoin mining now consumes about 129 terawatt-hours of electricity per year. Compare this to Google’s net consumption of 12.4 terawatt-hours, and the scale becomes clear.

in terms of emissions. Inspired by the subsequent gold rush of enterprising nerds handing out great battalions of graphics cards round the clock, bitcoin’s carbon footprint is now said to rival that of Argentina.

Over the past two years, carbon emissions from counterfeit mining have increased by about 40 million tons, or the equivalent of 8.9 million cars.

Bitcoin is a bigger emitter than American Airlines and is rapidly catching up with the carbon footprint of the entire federal US government. If you want a British analogy, it is said that the energy expenditure of mining bitcoins a year can power every kettle in the UK for 27 years.

Almost no other human activity is so clearly useless. But as long as ‘proof of work’ remains the standard, it makes good business sense for bitcoin farmers to give up on their huge graphics cards as it generates a steady stream of revenue.

Well, energy consumption in itself is not a big deal. But most of the energy running those huge Chinese bitcoin mines comes directly from dirty coal.

As Greenpeace put it, bitcoin miners are ‘…powering 21st-century technology with 19th-century energy sources. In Iceland, locals are concerned that rivers are being dammed and the natural beauty has been completely destroyed to power the country’s thirsty bitcoin mines.

Back to Elon Musk’s intervention. “Tesla has suspended vehicle purchases using bitcoin,” read their statement.

“We are concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, particularly coal, which has the worst emissions of any fuel.

When Tesla announced it planned to accept bitcoin back in March, the decision was sharply criticized by industry analyst David Gerrard, who observed: “Tesla will receive $1.5 billion in environmental subsidies in 2020, by the taxpayer was funded.

“That changed and spent $1.5bn on bitcoin, which is mostly mined with electricity from coal. Their subsidies should be scrutinized.”

The tech industry, for its part, has made limited efforts to tackle the problem. NVIDIA, one of the more popular graphics card makers, recently launched a Drive update to intentionally make their devices less attractive to crypto miners working on the Ethereum blockchain.

Crypto miners’ insatiable appetite for cards often leaves genuine gamers unable to purchase them for their intended purpose. The good news is that not all cryptocurrencies are the same.

Take bitcoin’s rival Cardano, which runs on a consensus of ‘proof of stake’ as opposed to ‘proof of work’. This basically means that miners tie up some of their own coins as collateral when validating transactions, with rewards making their way in exchange for participation.

Importantly, millions of processors are not competing in the same space, which means radically lower energy consumption – all as low as 6 GWh for Cardano mining.

The Cardano’s coin, named after British female computing pioneer Ada Lovelace, works on these principles, as does an ambitious new coin from the people who created Ethereum, called Ethereum 2.0. Chia, yet another cryptocurrency, uses a novel ‘proof of space’ verification system.

Users assign free space to the network on their hard drives, which is a much less energy-intensive process than Proof of Work. Although, in fairness, Chia has caused physical shortages of hard drives in Vietnam and parts of China.

Bitcoin is by no means the only environmentally destructive cryptocurrency. Ethereum’s carbon footprint is as big as Hong Kong’s.

Bitcoin defenders have been quick to point out that the convention banking system is a much worse offender, burning up over 260 tw/h compared to the comparatively modest 129 tw/h of their crypto coin.

But when you consider that more than half of the world’s population uses traditional banking, and perhaps 100 million use bitcoins, this comparison starts to sound a bit poor. So what to do?

Hopefully, bitcoin will see the error of its ways and revise its ‘proof of work’ approach. Or expect renewable energy sources to become sluggish.

Either way, it’s worth remembering that bitcoin’s carbon footprint is only half that of unused home appliances lazily left on standby across the US.

One problem at a time though eh. what do you think Is Elon’s carbon complaint a wicked ploy to interfere in the markets? Do you have any hot crypto tech? Tell us in the comments.

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