The most well-known, pioneering cryptocurrency, Bitcoin has experienced a skyrocketing upward motion during the past year. A series of record breaking all-time highs stands as testimony of the rising popularity of the first-gen cryptocurrency among investors, but also large-name companies – the latest being Tesla and Elon Musk with a whopping 1,5 billion dollar worth investment.
Tesla Inc supposedly holds anywhere between 37,020 and 51,137 Bitcoin which suggests approximate gains of anywhere between $0,29 billion and $0,98 billion. This means that Tesla already made more in Bitcoin than electric vehicles; this transaction created validation for the cryptocurrency making it clear that it should be seen as a stepping stone for other publicly traded companies to do the same. The popularity of BTC is on a definite rise, but so is the energy used to mine the cryptocurrency, which prompts concern about its environmental impact and questions its long term value.
Despite the recent decline in value, the energy used for harvesting soared substantially, elevating the annual carbon footprint to the equivalent of entire countries such as Argentina and Norway, according to research published by Cambridge University. Mining Bitcoin requires large computing resources, complex mathematical algorithms and extensive electrical infrastructure to verify transactions. Following the solving of any given problem, the miner receives a reward – Bitcoin. The fast paced rise in BTC price makes mining seem more attractive, thus adding new mining hardware to the network and increasing the overall electricity consumption.
It’s still unclear what are the exact numbers behind energy consumption and how much Bitcoin actually uses, but a number of 129,09 terawatt-hours (TWh) yearly shows up in the study. If the mining increases, so does the energy consumption and the overall carbon footprint; and the more machines are used for mining, it is more likely that the solution to the puzzle will be found. Be that as it may, more machines means that more electricity is needed to run and cool the computing equipment, which subsequently leads to higher costs for the miner as well.
The current Bitcoin price sits at $47,698 (the ATH being $56,840) with an estimated 18,6 million Bitcoin in circulation according to Coinbase. The recent Musk investment is likely part of the reason behind the ongoing digital currency boom, although it uncovered flaws in Tesla’s sustainability initiative. The company received criticism from high profile critics such as Janet Yellen, the US Treasury Secretary, who recently described the currency “an inefficiant way to conduct transactions”, also commenting that the amount of energy used for processing is staggering.
Now that Bitcoin reached its mining limits, average computers can no longer conduct mining operations, which leaves us with intensive power sources being needed to complete the process. This results in the everlasting search for abundant energy sources by miners, making sure they’re at the lowest possible cost. Reports have shown that China is by far the leader in Bitcoin mining, despite the fact that it made substantial progress in the green energy sector. Chinese mining pools have dominated mining in the last couple of years and the reason behind that is the relatively low fee structure, which attracts numerous non-Chinese miners.
To conclude, the study is hoping to launch an interactive map in the near future, which will track and follow energy consumption of Bitcoin mining facilities – this will, in turn give us a clearer picture of the entire problem solving process, when it comes to the environmental impact of mining Bitcoin. It is still unclear what is the extent of these environmental and energy consumption issues, but the problem is receiving more and more attention by the public and we can hope that it will be solved or at least reduced in the near future.