In an ever environemtnally conscious world you might be shocked to find out just how much energy
Bitcoin uses. Hi I’m James Preston and before I breakdown bitcoins energy usage, please make sure
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Recently, the New York Times published an article outlining Bitcoin’s energy usage.
According to the article, Bitcoin’s energy usage has increased tenfold in the past five years
and now accounts for 0.5 per cent of all energy usage on Earth. While Bitcoin’s high consumption
of electricity has been known now for some time, what wasn’t known was that Bitcoin
was actually designed to consume more energy in a bid to protect its network from attack.
LET’S START WITH HOW BITCOIN MINING OPERATES Bitcoin was the first cryptocurrency blockchain
created in the wake of the 2008 global financial crisis. Its creation was a direct reaction to
the GFC and the perceived problem of centralised finance, which governs the traditional financial
system. Bitcoin and cryptocurrency, in general, aims to address that problem by implementing a
decentralised platform – meaning that third parties, like banks, lending facilities and
government organisations are omitted from the system, leaving a peer-to-peer system of finance.
Bitcoin’s blockchain operates on what’s known as a proof-of-work consensus, meaning its coins need to
be mined by powerful computers required to solve complex mathematical problems. Those mathematical
problems, take a lot of computing power to solve, and computing power equates to a whole lot of
energy usage. And as Bitcoin has increased in popularity since 2009, a higher circulation
means an increase amount of blockchain usage and subsequent mining. Bitcoin mining now consumes
around 91 terawatt-hours of electricity annually, which is more annual electricity use than all of
Finland – a nation with over five million people. SO
Bitcoin’s heavy consumption of energy was brought to the public’s attention earlier this year
when Tesla billionaire Elon Musk labelled the digital currency’s mining practices
harmful to the environment. Prior to this, Musk had been a huge supporter of Bitcoin and made
the decision in March for Tesla to accept the crypto as payment for their electric vehicles.
Moreover, Tesla famously added $1.5 billion us dollars worth of Bitcoin to its portfolio.
MUSK’S ALIGNMENT and support of Bitcoin coincided with a rapid period of growth for the crypto
as more and more people equated his endorsement to a legitimisation of the digital currency. In
April, Bitcoin hit a record high of around $63,000 US DOLLARS just weeks before Musk
would announce via Twitter that Tesla would now cease accepting Bitcoin in exchange for their
vehicles. [w] In the same tweet, Musk would cite Bitcoin’s high-energy-consuming mining practices
as the reason for the decision. [e] While Bitcoin and blockchain technology offer exciting
opportunities for the future, there are certainly environmental cons regarding crypto mining. Thus,
crypto leaders and managers will need to focus more on reducing the harmful environmental impact
of crypto mining as digital currencies become an increasingly bigger part of the world’s future.
Failure to adopt greener practices could create a catastrophic result for Bitcoin
and other big players, and provide a pathway for the likes of Cardano.
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For more info head across to kalkinemedia.com - im james preston for kalkine.