Approximately 0.5% of the global capacity of power plants today goes to the mining of the bitcoin and other types of cryptocurrency, which is equivalent to the energy budget of a small European country, say scientists in an article published in the journal Joule.
“A lot of people tried to estimate these figures roughly, but none of my colleagues tried to study the production of cryptocurrency from the scientific point of view, for me, even this 0.5% is a very shocking indicator. If the bitcoin price continues to grow, its share in electricity costs can easily grow to 5%, which is very bad for the global economy, “says Alex de Vries, an economist at the PwC Experience Center in the Netherlands.
The idea of creating blockchain – secure databases, each block in which it is connected with all other parts of the database and cannot be faked or changed, appeared long ago, about 30 years ago. Despite the promise of this idea, it found its first application relatively recently, in 2008, when the first cryptocurrency was created based on it – bitcoin.
For a long time it was an interesting but useless toy for computer enthusiasts, but in 2013 the popularity went up, like the course, rose sharply, rising from a level of 2-5 dollars per bitcoin to a bar of 800-1100 dollars. Later the course collapsed, but this did not prevent the emergence of many new cryptocurrencies and their penetration into the public consciousness.
Their appearance gave birth to a whole layer of entrepreneurs and financiers engaged exclusively in trading or mining bitcoins. Initially, they “mined” on ordinary household computers equipped with powerful video cards, but now in China and in other countries, there are giant “farms” for the production of crypto-currency, collected from specialized chips intended only for this purpose.
The existence of such “bitcoin plants”, as de Vries points out, has made economists and IT enthusiasts think about it a long time ago, about how much energy this industry consumes and how its existence affects the world electricity market.
This is quite problematic to do since the mining of cryptocurrency has recently become an illegal business in China and in some US cities, and the “miners” themselves, for understandable reasons, rarely talk about what capacities they have and how they assess their expenses.
De Vries approached this problem on the other hand, using two things – the growing complexity of bitcoin mining and the rationality of the miners and chip makers. It manifests itself in the fact that the first will not produce bitcoins at a loss, while the latter will produce devices that will allow them to obtain more coins than the chip itself, while the complexity has not yet grown.
All these things, as the economist notes, are reflected in the cost of devices for bitcoin mining and how much energy they consume. Using this data, he analyzed how the complexity of bitcoin mining increased over the past year and calculated the current worldwide mining speed, and how much energy it takes now and will be spent in the future.
His calculations showed that now the whole network of bitcoin producers produces about 28 quintillions (10 to 18 power) hashes every second, which takes at least 2.5 gigawatts of electricity. In the future, if the bitcoin rate continues to rise after the current fall, these figures may rise to a mark of 7.67 gigawatts, which is equivalent to the amount of energy consumed by the whole Austria or Ireland. As de Vries hopes, his calculations will help politicians and economists find the right approach to the regulation of the cryptocurrency market in the future.