gard to bitcoin and other cryptocurrencies … on a voluntary, best-effort basis.”
As cryptocurrencies rise in price,
the problem isn’t going away. Right
now, Digiconomist estimates that bitcoin mining, the process of generating bitcoins, accounts for 0.29% of the
world’s annual electricity consumption. The mining of a single bitcoin
block—a block of tranasaction data
on the bitcoin network—consumes
enough energy to power more than 28
U.S. homes for a day.
Other cryptocurrencies that are
structured similarly to bitcoin use
energy for mining, too. Bitcoin is the
most popular and best known cryptocurrency, but it is not unique in its energy needs.
Some people wonder if cryptocurrencies will disrupt the financial
system, while others wonder if they will
break the environment in the process.
Mining for Digital Gold
Many cryptocurrencies, including bitcoin, are “mined” into existence. Mining
is when computers solve complex math
problems to generate new bitcoins on
the bitcoin network. The computers that
solve each progressively more complex
equation receive a reward in bitcoin.
According to site 99Bitcoins (a
source of information on the crypto
currency for the non-technical), a “
constant amount” of bitcoins is created
when a math problem is solved. The
number of bitcoins awarded used to
be 50 per problem solved, dispersed
among all bitcoin miners; however, that
number drops by half every 210,000
times an award is given out. In late 2017,
that meant 12. 5 bitcoins were awarded
each time each progressively more difficult math problem was solved.
The bitcoin network, says the site,
“is designed to produce a constant
amount of bitcoin every 10 minutes.”
That means every time a miner joins
the network, it will become harder to
solve the problem resulting in the reward of bitcoins. The difficulty scales
up to ensure bitcoin is generated every
10 minutes, no matter how much pro-
cessing power you throw at it.
It is here that the energy problem
arises. Bitcoin uses a “proof-of-work”
(PoW) system to mine new bitcoins
and verify transactions on the network.
Po W means that computers “mining”
bitcoin prove the data in each block of
bitcoin being mined (the hard math
problem to solve).
“The proof-of-work scheme re-
quires guessing the solution to an
equation (actually, an inequality),”
says David Malone, a lecturer at Ire-
land’s Maynooth University. “The
guessing uses lots of computing power
and, consequently, electricity.”
When PoW is completed, rewards
are paid out in bitcoin. Depending on
the price of bitcoin at any given time,
you may spend less in electricity costs
than you receive in bitcoin, potential-
ly making the venture profitable.
For instance, 99Bitcoins calculates
that mining bitcoin for one month using one advanced piece of computer
hardware would use 1,375kW of electricity, which it estimates would cost
the user $118.
However, remember the part about
the mining math problems getting
harder over time? More and more
computational firepower is required
over time to mine at the same rate in
order to keep your profitability stable,
at least in terms of the number of bitcoins earned.
To cope, the bitcoin mining community often adopts ASICs, or applica-tion-specific integrated circuits. ASICs
are circuits configured for a particular
use case. Specialized ASICs are more
powerful than regular computers at
bitcoin mining, giving miners with
these ASICs the ability to mine faster.
“Bitcoin’s proof-of-work scheme
has proven particularly easy to build
custom hardware like ASICs for,” says
Malone. This has led to the adoption of
ware by those who would mine bitcoins
This isn’t always the case with other
“Some other proof-of-work schemes
[known as being ASIC-resistant] are
designed to be best calculated by regular computers, so people mining them
can use regular computers instead of
ASICs,” says Malone.
The result is a vicious cycle, with the
potential to consume an increasing
amount of electricity.
More and more computing power
is needed to mine bitcoin, which requires more and more electricity.
ASICs can be used to supercharge
your mining, which uses even more
electricity, and if bitcoin’s price rises,
it becomes even more profitable to
mine, which causes more miners to
jump into the game. The more miners, the more computing power needed to crack bitcoin’s math problems.
And so the cycle begins anew.
“So, while the value of bitcoin is
higher than the cost of electricity, we
can only expect more people to jump
in, increasing the overall energy demands,” says Malone.
How to Go Crypto-Green?
Bitcoin is the most popular cryptocurrency that uses PoW, but it’s not the
only one. Many cryptos run on various
types of Po W schemes. Ethereum, one
of the three most popular cryptos, uses
a Po W scheme.
Bitcoin alone uses a lot of electricity, but should other PoW cryptos become popular, the problem could get
much worse, much faster.
The good news is that the cryptocurrency community is aware of the
problem, although possible solutions
span the spectrum from theoretical to
“Some systems use a semi-central-ized model (like Ripple or Stellar) that
are more green, but the trust assumptions are different than a fully decentralized system like bitcoin,” says Joseph Bonneau, a cryptographer and
assistant professor of computer science at New York University who used
to work at Google.
The mining of a
single bitcoin block
electricity to power
more than 28 U.S.
homes for a full day.