Why does bitcoin use 10 times more electricity than Google?

The bitcoin market now tops $ 1 trillion, with the price increasing tenfold in a year. However, the focus is shifting to the massive electricity demands needed to keep currency online.

Here are some questions and answers about Bitcoin:

How much energy does it use?

The total energy consumed by the Bitcoin mining process could reach 128 terawatt hours this year, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI) compiled by researchers at Cambridge University.

That is 0.6% of the world’s total electricity production or more than Norway’s total consumption.

“These numbers may seem large compared to medium-sized countries or new technologies such as electric vehicles (80 TWh in 2019), but small compared to other end-use applications”, such as: B. Air conditioners and fans, said International Energy Agency analyst George Kamiya.

All of Google’s operations consumed 12.2 TWh in 2019, and all of the world’s data centers, with the exception of those mining Bitcoin, collectively consume around 200 TWh per year.

Even more pessimistic is the economist Alex de Vries, who compiled one of the first indices on this topic in 2016.

He believes the recent rise in the price of Bitcoin will intensify usage and increase energy consumption beyond that of any other data center.

Why is Bitcoin so energy intensive?

The promise of a hefty reward has fueled the rise of huge data centers for Bitcoin.

Bitcoins are earned by people on the network known as “miners” who intentionally solve complicated equations using brute force processing power under what is known as the proof-of-work protocol.

The protocol is designed to maintain network integrity and ensure a stable supply of currency by making calculations difficult when many people are mining and easier when few miners are working.

The system is designed so that the network will give out bitcoin to those who have successfully solved the puzzle roughly every 10 minutes.

Proof of work was one of the core principles of the most popular cryptocurrency created in 2008 by an anonymous person or group who wanted a decentralized digital currency.

“When you have new machines that are more efficient, you will use more machines” to capture a larger share of the mining market, said Michel Rauchs, who led the team that created the CBECI.

With Bitcoin priced at more than $ 55,000, the miners are at full capacity.

Bitcoin hit an all-time high last Saturday due to feverish investor demand – $ 61,742.

What are the environmental impacts?

Bitcoin proponents say the rapid development of renewable energy means that the currency has a moderate impact on the environment.

However, before the recent price hike in 2019, researchers at the University of New Mexico estimated that every dollar of value Bitcoin created in the United States caused 49 cents in health and environmental damage.

In addition, critics of cryptocurrencies point to the high geographical concentration of their use in countries such as Iran.

Affected by international sanctions preventing it from exporting its oil and benefiting from cheap and abundant electricity, miners in the nation of the Middle East have multiplied to escape the eye of Washington.

“There is roughly 5% to 10% of the mining that can be traced back to Iran,” said Rauchs.

However, the vast majority of activity is taking place in China, where Chinese miners benefit from the strong hydroelectric power generation in the south of the country for part of the year, he added.

However, they migrate north during the dry season, where electricity is generated from lignite, a particularly polluting coal.

“If you try to see Bitcoin’s footprint at a certain point in time, you get completely different numbers,” explained Rauchs.

Is it possible to change?

Critics have grown louder as Bitcoin has grown in popularity.

The second most widely used cryptocurrency, Ethereum, is considering moving from the proof-of-work protocol to a less energy-intensive system that would avoid some of the energy-saving processes.

However, Bitcoin would have great difficulty adopting such changes that risk making the network less decentralized and secure.

Proof-of-work “is so deeply rooted in its value, in its culture, that it would be sacrilege,” said Rauchs, to abandon the record.

He pointed out that despite numerous attempts, the community has not passed major reform of the cryptocurrency.

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