Cryptocurrencies are more popular than ever.
With an estimated 300 million people involved in more than 6,000 different projects worldwide.
But the use of bitcoin alone uses almost the same amount of electricity per year as Egypt.
This demand has led cryptocurrency companies to look for reliable cheap energy solutions.
So, how are crypto miners solving their energy needs needs?
In order to understand why cryptocurrency like bitcoin use so much electricity,
we need to look at how they work and why they were invented.
Bitcoin was created in the wake of the 2008 financial crash as an alternative to the traditional
financial systems.
The ones we trust to keep records of how we store, exchange and borrow money.
Instead of trusting these traditional financial systems, you trust the entire bitcoin network.
But to make the network secure, bitcoin uses a method that requires huge amounts of electricity.
Unlike banks, which keep a central record of your money, bitcoin shares a copy of every transaction
ever made across each computer in its network.
Every 10 minutes all the transactions made in that
time on the network are collected and verified by each computer which races to be the one to approve
the transactions on the finished record.
This is all done through a process similar to encryption
with each computer effectively trying to guess the encrypted outcome for new transactions.
The winner gets to add the new transactions to the record and is rewarded for their work in bitcoin.
This process is called mining and requires huge amounts of electricity because solving
the encryption involves intentionally complex arithmetic which guarantees that the process
costs real money in the form of electricity.
The process has been made unfeasibly expensive in
terms of computing power so that no one company can cheat or guarantee they're the winning miner.
It's all of this work, all of the computing that requires so much electricity that means
that crypto mining companies have started fulfilling their needs in very creative ways.
This is Hardin generating station in 2018
when it was scheduled for closure.
And this is it in 2022
after being revived by Marathon, a bitcoin mining company which is now the sole recipient of the
power station's electricity.
In 2020, as the power plant clung on, it operated for just under 50 days of the year.
But in the first nine months of 2021 alone, the plant fired up on 236 separate days.
This resulted in it emitting 187,000 tons of co2 in the second quarter of 2021.
The story is similar at the Scrubgrass plant in Pennsylvania
which was set to close before changing to powering bitcoin and burns coal to do so.
At the Greenridge generation plant on Seneca Lake, New York,
the site had ceased operations for three years before being bought and converted
from burning coal to natural gas and now provides energy for crypto mining.
And in Kentucky, a law was passed exempting cryptocurrency miners from electricity sales
tax in an attempt to lure them to the state.
It worked.
A new bitcoin facility is being built
next to the Big Rivers electric corporation which owns and operates three coal-fired power plants.
Environmentally conscious crypto advocates argue that bitcoin mining is unique amongst
electricity users because their only concern is acquiring the cheapest electricity possible.
They argue that bitcoin mining will inevitably switch directly to using renewable energy sources
as soon as they become cheaper than fossil fuels.
But in practice, there are examples
of people simply moving elsewhere where mining is heavily regulated.
This happened in China in 2021
when the country banned all cryptocurrency mining prompting miners to move overseas.
There are also cryptocurrencies that claim they will reduce energy needs
that one simple change in their operation, for instance, would drastically lower energy consumption.
Although, it will still be much greater than that of the normal banking sector.
But this change has been promised for a long time and has never materialised