Understanding the Debate on Bitcoin’s Energy Usage
During the last months, there has been a growing concern relating to the energy usage of digital currencies, with emphasis on Bitcoin. While there is no exact figure on the total amount of electricity consumed by mining operations and transactions, most people agree that the consumption is quite large.
With this in mind, following a study, Digiconomist estimated that the approximate electricity consumption for each transaction is of approximately 300kWh, yet there is a high possibility that the number can rise above 900kWh by the end of the year. Additionally, the research group has also stated that Bitcoin uses around 67.91TWh on a yearly basis, hence putting its energy consumption slightly above Chile’s, which is currently ranked as the world’s 40th country in terms of electricity usage.
While carrying out the study, several variables were considered. The gross number, however, was obtained by calculating how much money miners make through their operations, and estimating the amount paid for electricity.
The issue is of what type of electricity is used, as mining via clean energy shouldn’t affect the environment. However, most of the mining operations are powered by coal. Recently, several governments have taken steps to ensure that the impact of bitcoin mining is lowered – with this in mind, China has asked local utility companies to avoid granting miners low-cost deals for their electricity usage, thus leading numerous crypto miners to move abroad. The Canadian province of Quebec, however, asked mining operators to use the region’s spare hydropower, as an alternative source of clean energy. Similar actions have also taken place in Sweden and Iceland.
Currently, there are numerous debates on whether the cryptocurrency energy usage is truly having a negative impact. This is worth taking into consideration, as there are numerous other industries using far-more energy, yet those are not currently in the media spotlight.
Based on everything that has been outlined so far, it is recommended that efforts continue to be made, to reduce bitcoin’s energy consumption. Some possible solutions include moving to a Proof-of-Stake algorithm, choosing renewable energy sources, government incentives, adoption of the lightning network and more.