According to Mining News Pro - Cryptocurrencies have emerged as one of the most captivating, yet head-scratching, investments in the world. They soar in value. They crash. They’ll change the world, their fans claim, by displacing traditional currencies like the dollar, rupee or ruble. They’re named after dog memes.
And in the process of simply existing, cryptocurrencies like Bitcoin, one of the most popular, use astonishing amounts of electricity.
We’ll explain how that works in a minute. But first, consider this: The process of creating Bitcoin to spend or trade consumes around 91 terawatt-hours of electricity annually, more than is used by Finland, a nation of about 5.5 million.
That usage, which is close to half-a-percent of all the electricity consumed in the world, has increased about tenfold in just the past five years.
Worldwide mining for Bitcoin is consuming as much energy as the country of Denmark.
For dollar value produced, the computer-intensive process of "mining" digital currency consumes more energy than physically mining gold, platinum or rare-earth metals, new research has found.
Mining for precious metals is hard work, involving massive machines, huge smelters and harsh chemicals to extract resources like gold and copper.
But a lot of "virtual" work goes into mining digital currencies. Bitcoin, for example, is produced by computers that grind away at difficult mathematical problems.
A new study investigated how the energy consumed by these two processes compared — digital and traditional currency — and found that cryptocurrency mining can use more than four times as much energy for value produced as resource mining.
Bitcoin’s growing energy appetite
In the early days of Bitcoin, when it was less popular and worth little, anyone with a computer could easily mine at home. Not so much anymore.
Here’s a timeline showing how things have changed. You can see how much electricity would have been used to mine one Bitcoin at home (in terms of the average home electricity bill), assuming the most energy-efficient devices available were used.
Today you need highly specialized machines, a lot of money, a big space and enough cooling power to keep the constantly running hardware from overheating. That’s why mining now happens in giant data centers owned by companies or groups of people.
In fact, operations have consolidated so much that now, only seven mining groups own nearly 80 percent of all computing power on the network. (The aim behind “pooling” computing power like this is to distribute income more evenly so participants get $10 per day rather than $50,000 every 10 years, for example.)
Mining happens all over the world, often wherever there’s an abundance of cheap energy. For years, much of the Bitcoin mining has been in China, although recently, the country has started cracking down. Researchers at the University of Cambridge who have been tracking Bitcoin mining said recently that China’s share of global Bitcoin mining had fallen to 46 percent in April from 75 percent in late 2019. Meanwhile, the United States’ share of mining grew to 16 percent from 4 percent during the same period.
Bitcoin mining means more than just emissions. Hardware piles up, too. Everyone wants the newest, fastest machinery, which causes high turnover and a new e-waste problem. Alex de Vries, a Paris-based economist, estimates that every year and a half or so, the computational power of mining hardware doubles, making older machines obsolete. According to his calculations, at the start of 2021, Bitcoin alone was generating more e-waste than many midsize countries.
“Bitcoin miners are completely ignoring this issue, because they don’t have a solution,” said Mr. de Vries, who runs Digiconomist, a site that tracks the sustainability of cryptocurrencies. “These machines are just dumped.”
Crypto mining more energy than Denmark
"We found that for Bitcoin, Ethereum, Litecoin and Monero — which are four of the larger cryptocurrencies — they consumed anywhere from seven to 17 megajoules per dollar generated. Whereas gold, copper, platinum, and rare-earth oxides consumed anywhere from four to nine megajoules per dollar generated," environmental engineer Max Krause told Quirks & Quarks host Bob McDonald.
"Bitcoin mining consumed three times as much energy per dollar generated than gold mining."
Krause started looking into this because he was contemplating doing some digital currency mining himself.
"Once I started looking at the calculations and running the numbers, the amounts of energy that I'd be consuming in just my apartment were pretty astonishing," he said. "If I'm doing this in my apartment by myself, what is everybody doing across the network?"
After he added up the numbers, Krause explained he was shocked by the sheer amount of energy being consumed globally.
"Bitcoin is on track to consume as much energy as Denmark."
Energy and the environment
As digital currencies like Bitcoin grow more popular, the energy requirements will only rise — and not only because of the increased interest in mining.
"As Bitcoin became more valuable in 2016 and 2017, the amount of competition and the amount of interest in mining increased dramatically," he said. "The more interest there is, the harder the calculation becomes, and so the more energy is required to complete that calculation."
Krause's concern is not just for the amount of energy consumed, but also for the volume of climate-warming carbon emissions this energy represents.
He calculated that for the period of Jan. 1, 2016 to June 30, 2018, mining for the four major digital currencies he studied also represented between three and 15 million tonnes of CO2 emissions.