As a form of virtual currency, Bitcoin relies on a peer-to-peer computer network to track all transactions. The system uses a distributed ledger called the blockchain, which is interconnected and virtually impossible to tamper with. Anyone with a high-powered computer can join this network, but they need to run a high-performance cooling system to avoid overheating. Fortunately, there are other ways to save energy.
The electricity used by bitcoin mining has risen dramatically in the last year. According to the University of Cambridge’s Bitcoin Electricity Consumption Index, the machines need more energy than the country of the Netherlands – which has 17 million people. This has increased the demand for fossil fuels, which in turn drives up energy costs for nearby power plants. As the price of bitcoin has increased, the cost of running a Bitcoin miner is more than the cost of operating a small office.
Because of the increasing complexity of crypto-mining, the amount of energy used has risen as well. In the US, over a quarter of all Bitcoin mining activity is concentrated in Upstate New York. There, electricity rates are constantly rising, resulting in rising costs for local governments. Meanwhile, in China, cryptocurrency mining is costing the government $165 million per year. The disproportionate amount of electricity consumed by bitcoin mining is not only increasing the overall energy bill, but is also increasing carbon emissions and waste.
The 3rd Global Cryptoasset Benchmarking Study, conducted by the University of Cambridge, found that mining in the US consumed 121 terawatt-hours of electricity in 2017, the same as the energy consumption of the entire country of Argentina. This means that the demand for energy for crypto-mining is disproportionately increasing and that power plants are forced to provide more energy to meet the demands of the mining rigs.
The energy demand for crypto mining is so high that it is estimated to cost the US economy about $165 million in 2018. In China, cryptocurrency mining is a big business, but it is also a significant source of pollution. The electricity needed for mining a bitcoin requires a large amount of electricity. The US government-mandated electricity rates don’t allow for flexibility in demand, so it is not a good place for this industry to exist.
The crypto world depends on fossil fuels, and it is incredibly difficult to find alternatives to fossil fuel electricity. However, it is not entirely clear how to cut down on energy consumption. In addition to the environmental impact, it is also important to reduce energy usage in a country where the majority of its population depends on coal. As a result, it is crucial to reduce the carbon footprint of cryptocurrency mining. The third-largest number of miners is located in Sichuan Province, which is famous for its abundant hydroelectric power.