Bitcoin has faced severe criticisms for consuming a lot of electricity. Here’s what you should know about Bitcoin and energy consumption.
Several governments and environmental experts have increasingly raised concerns over Bitcoin’s high energy consumption. Recent statistics show Bitcoin uses about 150 terawatt-hours of electricity annually. That is more than the consumption of Argentina, a country with a population of over 45 million people. The production of that energy emits an estimated 65 megatons of carbon dioxide into the air annually.
Those statistics have impacted growing criticisms of Bitcoin as a significant contributor to global pollution and climate change. Nevertheless, the thirst for energy in the crypto ecosystem grows by the day as mining companies race to build more extensive facilities to cash in on the Bitcoin rush before its supply runs out.
The Dynamics of Bitcoin’s Energy Consumption
The Bitcoin ecosystem is entirely based on technology, with various production processes and applications that require electricity to run. Understanding how those processes occur can help you to comprehend the fuss behind Bitcoin’s high energy consumption.
Bitcoin mining requires an enormous energy amount in the entire network since miners use computers to solve puzzles on the blockchain for Bitcoin. Early miners used desktops and home computers to mine Bitcoin. The energy costs were relatively lower then because the computers consumed less power and the network had just a few users.
However, the puzzles that miners solved to earn the rewards became more complex and challenging as the market grew. That prompted miners to seek new computer hardware to generate more computational power. That also increased miners’ electricity consumption because the hardware is energy-intensive and runs 24/7.
Bitcoin mining has become a competitive venture today, with more giant corporations increasingly investing in powerful and hi-tech computational hardware to gain scale in the lucrative market. Crypto mining pools are now widespread around the globe, and most of the facilities rely on electricity generated by fossil fuels and coal-powered plants. Most Bitcoin mining operations now occur in the United States, accounting for about 35% of Bitcoin’s hash rate.
The industry’s heavy reliance on fossil fuel-generated power has impacted growing fears over its increasing strain on the world’s finite energy resources. Those revelations have prompted some countries like China to ban Bitcoin mining. Some companies have also temporarily halted accepting Bitcoin payments to convince miners to find alternative energy sources for their operations.
Mitigating Bitcoin’s High Energy Consumption
Government regulators and investors have suggested various ways to tame the crypto industry’s high energy consumption. Countries like China have banned crypto altogether, citing climate goals and economic instability. However, Bitcoin and crypto are the future of money, and denying them is certainly not the best way to address the energy consumption concerns.
Plattsburgh, New York, was the first city in the United States to ban crypto mining temporarily in 2018. However, no federal law exists that focuses on Bitcoin mining. Finding cheap, abundant, and clean energy is one of the key strategies that most crypto mining companies are currently exploring to cut the industry’s environmental impacts.
Several Bitcoin mining companies and exchange platforms such as bitcoin up have already begun shifting their operations to green energy sources, including solar, wind, and nuclear. Many governments now encourage the crypto industry to be flexible, embrace sustainable energy and adjust their energy consumption based on the current grid conditions.
Bitcoin mining is undoubtedly energy-intensive. However, experts point out that various innovative strategies exist for Bitcoin and the industry to reduce its energy consumption and mitigate environmental challenges. Thus, regulators, crypto mining companies, investors, and other stakeholders should work together to develop sustainable practices for positive growth. Mitigating Bitcoin’s energy consumption requires a combined effort of all the industry players.