Elon Musk, the CEO of Tesla, shocked the cryptocurrency community earlier this year when he announced that his company would no longer accept Bitcoin for cars. His decision, he said in a tweet on May 13, was based on an increase in the usage of coal and other fossil fuels to create the power needed for mining. After the tweet, Bitcoin’s value plummeted, and it continued to do so for weeks.
This year, Bitcoin, Ethereum, Dogecoin, and other prominent cryptos hit all-time highs or near-all-time highs, prompting concerns about the amount of energy required to mine the currency. As the cost of energy for crypto mining climbs, so does the quantity of carbon and garbage produced, exacerbating the global warming catastrophe.
But does cryptocurrency mining use only non-green energy? Continue reading this article to learn about cryptocurrency’s energy usage and how much energy it requires to be mined.
What is Cryptocurrency Mining?
When Bitcoins are traded, computers all around the world compete to finish a computation that generates a 64-digit hexadecimal number, or hash, for each Bitcoin.
This hash is entered into a public record, allowing anybody to verify that the transaction for that particular Bitcoin took place. The device that solved the computation first receives a reward of 6.2 bitcoins.
Similar mining technologies are used by other cryptocurrencies, which adds to the overall energy consumption.
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Why Is Bitcoin Mining So Power-Hungry?
Mining rig graphics cards operate 24 hours a day. It consumes a lot more energy than simply perusing the internet. When running, a system with three GPUs can consume 1,000 watts of power or more, which is the equivalent of turning on a medium-sized window AC unit.
You will find hundreds or even thousands of rigs operating in a single crypto mining operation. Rigs not only consume energy, but they also produce heat. The higher the number of rigs, the hotter it becomes.
You’ll need some cooling if you don’t want your setups to melt. Several computer fans are built into many mining setups. However, if you have numerous rigs, the space will quickly get too hot to work in, necessitating extra cooling.
Small businesses, such as those run by individuals, can make do with a standard room fan. On the other hand, mining centers require a lot more cooling, which necessitates the usage of electricity.
What Is The Energy Cost of Mining?
According to the Digiconomist’s Bitcoin Energy Consumption Index, one Bitcoin transaction consumes 1,544 kWh or around 53 days of electricity for the average US family.
In terms of dollars, the average cost per kWh in the United States is 13 cents. As a result, a Bitcoin transaction would result in over $200 in energy expenses.
Why Is It Hazardous For The Ecology To Use So Much Energy?
In the United States, fossil fuels account for more than 60% of all energy sources. Natural gas makes up the majority of that amount, while coal makes up the rest. The greenhouse effect is caused by the emission of carbon dioxide from fossil fuels into the atmosphere, where it absorbs heat from the sun.
As mining rigs demand more energy, surrounding power plants must create more electricity to compensate, potentially increasing the use of fossil fuels. States with failing coal power facilities, such as Montana, New York, and Kentucky, are attempting to profit by courting cryptocurrency mining operations.
Bitcoin’s Current Renewable Energy Usage Scenario
In May 2022, the Bitcoin Mining Council was founded to advocate and report on bitcoin members’ sustainable energy usage. BMC is a voluntary and open forum of Bitcoin mining companies and other cryptocurrency enterprises. Its goal is to increase openness, knowledge sharing, and public understanding about bitcoin mining’s benefits.
One of the council’s goals is to regularly disclose energy usage information for the worldwide bitcoin mining industry. According to a recent survey, Bitcoin miners have already used 56 percent of their total electricity from sustainable or renewable sources. The utilization rate for council members is significantly higher, at 67.6 percent.
The council stated that their survey is based on information on sustainable energy from over 32% of the present international Bitcoin network and its members. According to the survey’s findings, participants use electricity with a 67 percent sustainable power mix. However, this study was extrapolated to generate worldwide estimates.
Climate Change Accord
Bitcoin proponents say that the carbon footprint of cryptocurrencies is negligible in comparison to the value they deliver. However, their modest or significant impact on climate change is being used as a justification by many countries, economists, the World Bank, and others to discourage people from using digital money. The Climate Change Accord (CCA) also wishes to avoid any unfavorable publicity.
The CCA, which was introduced in April of this year, attempts to limit the number of pages in history that discuss cryptocurrency’s negative environmental impact. The group, which is led by private sector companies, aims to migrate all blockchains to renewable energy by 2030, if not sooner.
By 2040, it wants the crypto business to be carbon neutral or produce net-zero emissions. It means that any greenhouse gases released into the environment will be offset by the benefits of cryptocurrency or newer technology founded on greener principles.
The CCA, which was inspired by the 2015 Paris Agreement, wants to decarbonize the crypto industry.
The Rocky Mountain Institute, the Energy Web Foundation, and the Alliance for Innovative Regulation are the driving forces behind the program. The first two are nonprofits dedicated to environmental sustainability and the transition to low-carbon lifestyles. At the same time, the Alliance for Innovative Regulation is an international advocacy group fighting for the introduction of fair financial practices.
Bitcoin mining consumes very little energy, is gradually getting more efficient, and is fueled by a higher percentage of renewable energy than any other significant industry. With the introduction of CCA, mining cryptocurrency will become more sustainable.