Why Bitcoin Consumes Massive Amounts of Electricity&And What Are Its Implications
Today, when every investor throughout the planet is hurrying to follow the latest economic trend of cryptocurrencies like Bitcoin, which has a value of approximately 1 trillion dollars, not many of these investors have shown concerns about the carbon emission that the cryptocurrencies are generating. Bitcoins are marketed 24×7 through cryptocurrency trading without making a pause during the entire year. Naturalists and activists have been bringing up worries about the negative impacts of Bitcoin mining on the climate and how cryptocurrency trading and mining can cause the demolition of fossil fuels. Let us understand the topic in detail.
Table of contents
- How are Bitcoins created?
- What is the source of energy for Bitcoin creation?
- What are the implications of Bitcoin creation?
- Effects on Global Warming.
- High carbon footprint.
- Effects on electric-vehicle productions.
- Shortage of high-powered chips.
- Dangers of nuclear activities.
- Closing Thoughts.
How are bitcoins created?
Bitcoins are generated through the mining of crypto coins. Cryptocurrencies need to be mined due to their decentralized nature to be workable. Bitcoin mining is a procedure for producing new coins wherein high-tech computers carry out complex numerical evaluations or mathematics puzzles. In this process, these high-tech computers are utilized for extended periods to do elaborate computations. With the increase in the number of bitcoins in the market, the more time it takes to mine a new bitcoin simultaneously, greater power is burned in the process. As mining gives a vital source of income, miners have become eager to run these high power-consuming machines for longer hours to grab a piece of money. The Bitcoin mining software normally requires around ten minutes to address the complex programming calculations and to create a block.
What is the source of energy for Bitcoin creation?
Fossil fuels are the powerhouse of the crypto world. The mining process of crypto coins repeatedly utilizes energy provided by fossil fuels. With the increase in Bitcoin price, the quantity of energy consumption for bitcoin creation gets higher. The value surge in bitcoins draws in more clients to connect to the Bitcoin network.
In one of the reports published by the investment company “Galaxy Digital”, it was stated that the yearly power utilization of the Bitcoin network remained at 113.89 terawatts/hour (TWh/year)
for every year. However, the financial system absorbs 263.72 terawatts/ hour every year while gold mining burns through approximately 240.61 terawatts/hour every year. This report was also asserted by the International Energy Agency (IEA); basically, conventional financial systems and processes of gold mining almost consume double the power of Bitcoin mining.
What are the implications of Bitcoin creation?
As we discovered that Bitcoin mining is not the most energy-consuming process, the matter of concern is that most of the mining establishments for bitcoin are found in areas that heavily depend on coal to generate power. Due to this phenomenon, there are several implications of bitcoin creations that are a matter of concern for today’s environmentalists:
- Effects on Global Warming
As per studies, the process of creating bitcoin produces such an extent of CO2 emissions that alone can push global warming over 2 °Celsius in the coming three decades.
- High carbon footprint
Another study states theories of 480 to 500 grams of CO2 generated for each kWh energy consumption. That would imply that a total energy utilization of 184 TeraWatt per hour would bring about carbon dioxide emissions of around 90.2 million tons.
- Effects on electric vehicles productions
The impacts of cryptocurrency mining frequently affect different areas of the economy. With miners utilizing high-energy consuming computers for extended periods to build new blockchains, these machines are not reliable for long-term use. A considerable amount of chips are required by makers of Bitcoin mining devices for producing these machines. Due to the Covid-19 pandemic, the global shortage of these chips has emerged in recent times. Presently, This shortcoming has begun influencing the active manufacture of electric vehicles throughout the world.
- Shortage of high-power chips
A lot of time is required to create high-tech computers and chips for processing bitcoins. There are only two chip fabricators that can be called fit for delivering such high-power silicon chips in the whole world. This situation has shown the potential increase in demands of such chips by different digital areas like home electronic producer sectors, AI (Artificial Intelligence) sector, and transportation.
- Dangers of nuclear activities
At present, nations like Iran are actively employing cryptocurrency to bypass financial sanctions that came into effect to stave off any country from formulating nuclear powers. But, the inexpensive energy has attracted numerous cryptocurrency miners, and the mining processes in Iran presently addresses 8% of the absolute computational force in Bitcoin’s network. This way, countries like Iran utilize Bitcoin to support incomes while their oil exports are suffering due to international sanctions.
Even though Bitcoin may be recognized as a decentralized network, the elements of its ecosystem are not. Due to the rising implications of the bitcoin mining industry, top economists are now suggesting that governments can exclude cryptocurrency trading from digital asset markets in order to lower the rates of crypto coins.
Attend blockchain certification programs led by the highly knowledgeable cryptocurrency auditor at BLOCKCHAIN COUNCIL.