Currently, organizations around the world are facing pressure to limit the consumption of non-renewable energy sources and carbon emissions into the atmosphere. But figuring out how much to consume is a complex question intertwined with debates around our priorities as a society. After all, calculating what goods and services are “worth it” for spending these resources, is really a question of value. As cryptocurrencies, and Bitcoin in particular, have grown by leaps and bounds, energy use has become the latest highlight in the larger conversation about what digital currencies are really good for and for whom. .
So how much energy does Bitcoin actually consume?
How much energy does Bitcoin actually consume?
According to the Cambridge Center for Alternative Finance (CCAF), Bitcoin currently consumes around 110 Terawatt hours per year – 0.55% of global electricity production, or roughly equivalent to the annual energy consumption of small nations. like Malaysia or Sweden. This certainly sounds like a lot of energy. But how much energy should a monetary system consume?
How you answer that may depend on how you feel about Bitcoin. If you believe that Bitcoin offers no utility other than serving as a ponzi scheme or a device for money laundering, it would only be reasonable to conclude that consuming any amount of energy is wasteful. If you are one of the tens of millions of individuals worldwide who use it as a tool to escape currency repression, inflation, or capital controls, you most likely think that energy is spent negatively. effective period.
But here it is important to understand that energy consumption does not mean the same amount of carbon emissions. This is because a hydroelectric power unit will have much less impact on the environment than the same unit of coal-fired power.
While there is no clear estimate of the energy mix used in bitcoin mining, a report has shown that 73% of bitcoin’s energy consumption is carbon neutral, thanks to its significant dependence on energy. hydroelectricity in the main mining hubs including Southwest China and Scandinavia. Another report from CCAF suggests that 39% of the energy consumed in mining is carbon neutral.
In the UK, the energy Bitcoin uses could be used to power all the electric kettles in the country for almost three decades. By comparison, however, the amount of electricity consumed annually by switched on but idle devices in homes around the US could power the entire Bitcoin network for an entire year.
While blockchain technology has become one of the biggest revolutions providing promising support for various sectors ranging from logistics to banking, market experts are divided on consumption. unsustainable energy of blockchain. This perception is certainly false that bitcoin’s energy cost per transaction is higher than the cost of mining.
Bitcoin mining is a more energy-intensive process than validating transactions. Once the coin is mined, the energy requirement is greatly reduced to validate the transaction. We cannot come to an exact conclusion by just dividing the total energy demand of bitcoin by the total number of transactions. This is because mining requires more energy than transactions.
Is Bitcoin Bad for the Environment?
The environmental impact of cryptocurrencies is huge among the many concerns voiced by skeptics. Agustín Carstens, who runs the influential Bank for International Settlements, has called Bitcoin “a combination of a bubble, a Ponzi scheme, and an environmental disaster.”
Many people believe that cryptocurrency is the currency of the future, but is it bad for the environment? Can Bitcoin and other cryptocurrencies undo the hard work that has been done around the world thus far to improve the state and health of the planet? According to some critics, Tesla’s decision to invest heavily in Bitcoin undermines the environmental image displayed by the electric car company.
The soaring Bitcoin price gives even more incentive for miners to run more machines and consume more energy. According to researchers at the Cambridge Center for Alternative Finance, as the value of Bitcoin increases, so does the energy consumption used to mine it.
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