Though bitcoin‘s value may rise and fall dramatically, the energy required to produce bitcoins seems to be ever on the rise. Researchers estimate that the bitcoin network may consume as much as 7.7 gigawatts of energy, the equivalent of the electricity required to power Austria. If the value of bitcoin continues to rise, the entire bitcoin network may one day consume up to five percent of the world’s energy.
A new study published in the journal Joule predicts that bitcoins use up to half a percent of the world’s total energy supply. Critics question the study’s assumptions and claim a lack of sufficient evidence to determine future bitcoin energy consumption with such precision. Regardless, bitcoin’s rising price could come with significant environmental costs.
The bitcoin network primarily consumes energy through “mining” of the cryptocurrency, which occurs by running a computer program and time-stamping bitcoin transactions. These transactions take place on the blockchain, the networked account system behind cryptocurrencies. “The main problem is that the energy consumption primarily relates to how agreement on the underlying blockchain is reached,” blockchain specialist and study author Alex de Vries told Gizmodo. “Mining makes it a big competitive lottery where the winner — every 10 minutes — gets to create the next block for the blockchain. The built-in reward for this process is fixed, so it motivates participants to constantly add new machines to the network to get a bigger slice of the pie — the more computational power, the more you win.”
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In his study, de Vries focused on determining the cost of maintaining the network after bitcoin mining becomes unprofitable. “In essence I’m taking an economic point of view to figure out where energy consumption is heading. Previous work typically looked at available hardware, and produced results that only said something about the current consumption,” de Vries said. “My findings were based on the current conditions, so bitcoin doesn’t need to increase in value for the conclusion to hold.”
Some experts disagree with de Vries’ methods and conclusions. “A major limitation of de Vries’ model is that it depends on guessing bitcoin’s future price as well as the cost of electricity to miners,” bitcoin investor Marc Bevand told Gizmodo. “In the paper he assumes bitcoin maintains its current level at approximately $8,000 and electricity costs $0.05 per kWh. If either bitcoin goes up or electricity costs plummet, the energy consumption should increase, and vice versa.”
Though the endeavor to determine the future of bitcoin and other cryptocurrencies continues, it seems clear that the environmental impact of bitcoin may be steep.
Via Gizmodo
Images via Depositphotos (1, 2)
