How much electricity does Bitcoin mining use?
The past few years have seen the price of Bitcoin’s rise greatly, rising as high as $20,000 for one Bitcoin at the end of 2017.
Most investors were carried away by the increase in price while a more significant issue was emerging, that is the rise in global electricity consumption required to mine more Bitcoins. Mining is a significant function in the cryptocurrency industry for any coin that uses the Proof-of-Work algorithm that requires ‘miners’ to use large amounts of electricity to solve mathematical equations which eventually produces a new block on the chain (hence, blockchain).
Recently, the amount of power used to mine Bitcoin has come under intense scrutiny. The amount of energy used for mining bitcoin is so high that it is higher than what 160 countries consume annually.
Digiconomist, a website that provides detailed analysis, opinions and discussions with regard to Bitcoin and other cryptocurrencies, carried out a research which shows that the amount of energy consumed when mining bitcoin globally has already exceeded the amount used on average by Ireland and most African nations.
However, the pseudonymous creators(s) of bitcoin designed the system so there would be a fixed supply of bitcoins to be mined (a maximum of 21 million). To guarantee the durability of the system, the cryptographic problems mining machines solve to earn coins get increasingly harder, meaning it takes longer to mine which invariably use more power.
The Bitcoin PoW mechanism is so expensive that it consumes an equal amount of electricity required to power a country like Switzerland for an entire year.
Bitcoin’s present estimated electricity consumption is 61.4 TWh yearly, which is equivalent to 1.5% of the electricity used in the US. The chart below shows the energy consumption of Bitcoin in comparison to major countries in the world.
The block mining cycle rewards investors worldwide so they can continue mining Bitcoin. The reason is that mining provides a constant income stream.
Now miners do not mind using power-hungry machines to get a piece of it. This has now caused the total energy consumption of the Bitcoin network to grow out of hand, while the price of the cryptocurrency fluctuates.
According to data and estimates gathered, these figures tell us that the Bitcoin network currently consumes at least 2.55 gigawatts of electricity, and its consumption could increase to about 7.67 gigawatts in the nearest future, which can be compared to the amount of energy consumed by countries like Ireland 3.1 Gigawatts and Austria 8.2 Gigawatts.
The global Bitcoin mining consumption is at 116%. The United Kingdom consumes an estimated 309 TWh of electricity yearly, so global Bitcoin mining consumption is comparable to 9.4% of the United Kingdom’s total.
Estimating Future Energy Consumption of Bitcoin Mining
With regards to future energy consumption, Morgan Stanley estimated the orders from a Bitcoin mining rig manufacturer, the Taiwan Semiconductor Manufacturing Company. According to the estimates, they have orders to supply between 15,000 to 20,000 Bitcoin rigs monthly for the first quarter of 2018.
What this means is that:
- The total Bitcoin mining pool could see an increase of 5 to 7.5 million new rigs extra the following year if the first quarter of 2018 production rates continue all year.
- Before 2018 ends, the Bitcoin network could possibly consume more than 13,500 megawatts per hour (120 terawatt-hours per year), or it could even increase to about 16,000 megawatts per hour (140 terawatt-hours per year) based on 60% direct electricity usage and 90% utilisation.
- The likely cost of global mining is estimated at $1.5 billion.
- Bitcoin mining uses more power than 12 states in the United States and could power about 6.1 million people.
Below is the current energy consumption of Bitcoin mining and the estimated consumption before the year runs out.
It’s not all doom and gloom as researchers are also working on solutions. Solutions like the Lightning Network to improve the throughput of the network is being experimented with by the Bitcoin development community, althought it’s a layer 2 solution on top of Bitcoin, the underlying present blockchain will still be required. In time and perhaps with more adoption as time proceeds, we may see more demand for Bitcoin mining, which culd lead to an increase in further electricity usage. For the time being, however, Bitcoin mining is creating a controversial problem, and the networks energy consumption is increasing rapidly.
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