The energy footprint of Bitcoin mining is extraordinary. The process of minting new coins for cryptocurrencies, which was already huge in energy consumption, will more than double by 2023 due to price hikes. The United States, one of the world’s largest centers for cryptocurrency mining, is in the eye of an escalating storm over control of cryptocurrencies’ problematic energy consumption and associated emissions, but is unable to regulate them. It won’t be easy.
By the end of last year, global energy consumption from Bitcoin mining had increased by 101% since January 1, reaching a whopping 141.2 TWh, according to data from Digiconomist. All of this adds up to a carbon footprint of 78.7 million tons of CO2 per year. With that in mind, Bitcoin mining currently consumes as much energy per year as Australia, more energy than Egypt, which has a population of 110 million people, and emits more carbon dioxide than Oman. It turns out.
Bitcoin’s huge energy and carbon footprint results from the cryptocurrency’s unique mining process. Bitcoin relies on a blockchain-powered public ledger to keep transactions anonymous, secure, and verifiable. To achieve this, each new entry to the ledger requires complex computational problem solving known as “proof of work” that relies on trial and error. That is, plug in a random solution and see if it fits. The “miner” who solves each unique puzzle the fastest receives newly minted Bitcoins. This means that miners, who are using high-performance supercomputers that can perform such tasks more quickly, have a significant advantage. This is where heavy energy usage is taken into account.
As the price of Bitcoin soars, more and more miners are competing to solve these puzzles in real time. However, if more miners create more Bitcoins more frequently, the market will flood and the currency price will fall. To prevent this, solving the proof of work becomes increasingly difficult with each puzzle, and it always takes 10 minutes to mine one Bitcoin.
As a result, Bitcoin production will remain the same as always, but energy usage will increase forever. In 2009, it was possible to mine Bitcoin using just a few seconds of household electricity, but in recent years it has required about nine years’ worth of electricity. As a result, many miners have entire warehouses of supercomputers running on his 24/7.
And certain countries and regions of the world bear the burden of their energy consumption more than others. China was once a powerhouse in Bitcoin mining operations, but the Chinese government banned Bitcoin and other cryptocurrencies in 2021. As a result, many Bitcoin miners have moved their operations to the United States due to its abundant energy resources and relatively lax regulations.
In just a few years, the United States’ share of global cryptocurrency mining has expanded from 3.5 percent to 38 percent, making the United States the single largest cryptocurrency mining market. In the process, the Bitcoin boom has “strained local power grids, raised electricity bills for neighbors, and kept once-decommissioned fossil fuel plants open,” according to a recent report in Grist. However, it is very difficult to know exactly who is mining where and how much energy is being used in each operation.
The United States is currently trying to understand the situation. Step 1: Try to understand how much energy Bitcoin miners consume in the continental United States. Last week, the U.S. Energy Information Administration announced it would begin collecting energy usage data from more than 130 “identified commercial cryptocurrency miners” operating in the United States.
“As crypto mining increases in the United States, the energy-intensive nature of this business and its impact on the U.S. power industry are becoming increasingly important,” the EIA said in a new report that served as the basis for its investigation. There is growing concern.” It started this week. “Concerns expressed in the EIA include the strain on the electricity grid during peak demand periods, the potential for higher electricity prices, and the impact on energy-related carbon emissions.”
But beyond calculating the energy use of commercial-scale mining operations in the United States, actually changing that number will be an uphill battle. Previous efforts to regulate the industry have been laughable, largely stemming from exhortations and pleas for miners to source their energy from cleaner, more sustainable sources. Such guidance will almost certainly fall on deaf ears, as much of the appeal of the crypto world is its complete lack of governance and oversight. In 2021, the BBC said, “If there’s anything that represents free market capitalism in its purest form, it’s Bitcoin,” and that efforts to promote voluntary sustainability standards are “a bit bizarre. ” he said.
In the future, measures to control Bitcoin will need to become even stricter. And more than that, it needs to be enforceable. While getting the real numbers through EIA’s current study is an important first step, it is unclear how the government will effectively follow up with meaningful policy measures.
Written by Hayley Zaremba, Oilprice.com
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