High Energy Use by Bitcoin Miners
The Economist made an assertion that Bitcoin and cryptocurrency is expensive in terms of energy use. The report says ‘Bitcoin has been alarming people for years’ referring to the amount of electricity required for its mining. This amount has been compared to the amount of electricity needed by a small country.
While there has been a lot of talk about the electricity use associated with the mining of cryptocurrency, the Economist recently came with an article named ‘Why bitcoin uses so much energy.’ The magazine uses quotes from Alex de Vries, a bitcoin specialist at PwC. According to de Vries,
The current global power consumption for the servers that run bitcoin’s software is a minimum of 2.55 gigawatts (GW), which amounts to energy consumption of 22 terawatt-hours (TWh) per year – almost the same as Ireland.
The article says that this amount of consumption is increasing day by day with no signs of a slowdown and adds questions why does it take so much energy for something that exists only electronically.
Recently, New York State also approved a new electricity rate scheme which allows providers to charge Crypto Miners higher than others. John Rodes,the chair of the New York State Department of Public Service said,
We must ensure that business customers pay a fair price for the electricity that they consume. However, given the abundance of low-cost electricity in Upstate New York, there is an opportunity to serve the needs of existing customers and to encourage economic development in the region.
Research done has shown that the Economist may have gotten its facts wrong and bitcoin miners do use less energy than that used by a country like Ireland. This was done by analyzing Ireland’s actual energy consumption and comparing that with bitcoin mining. The cost of mining is increasing, and the electricity cost makes up about 50% of it. However, the money paid for electricity in Ireland surpasses the amount the bitcoin miners pay by almost 70%. So it is true that mining is becoming less profitable because of this energy consumption, but the comparison being done seems to be inaccurate.
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