The mining of Bitcoins by super powerful computers has the effect of a phenomenal consumption of electricity, higher than that of countries like Switzerland or Singapore. According to David Derhy, cryptocurrency analyst at eToro, areas for improvement are being studied.
Superpowered computers at work to generate Bitcoins
After the Bitcoin halving last Monday (an event whereby less Bitcoin is generated on the market, editor’s note), the rewards intended for Bitcoin miners have been halved. As a reminder, Bitcoin is based on a Proof of Work model. This means that in order to maintain the blockchain and join the network, a miner must make computing power available to the network.
To do this, a cryptocurrency miner will therefore use graphics cards or specialized machines called ASICs in the hope of solving the computer calculation, validating the transactions of the next block and receiving the reward intended for theminor . On the other hand, these machines consume a lot of energy, so it is not uncommon to hear many criticisms about the ecological impact of cryptocurrencies and blockchain. But what is it really?
Phenomenal power consumption
According to the Cambridge index on the electricity consumption of Bitcoin , the latter would consume 5.19 gigawatts, for an annual total estimated at 79.87 Twh (terawatts / hour) which represents 0.32% of the electricity produced each year (25,082 TWh). For comparison, this exceeds the electricity consumption of countries like Algeria, Switzerland, Israel, Singapore, Hong Kong, Qatar or even Portugal.
On the other hand, it is also important to moderate these remarks by recalling that in the United States, the amount of electricity consumed each year by domestic devices that are still connected but inactive could supply the Bitcoin network for 2.7 years.
Especially with the division of rewards and with a hash rate (unit of measurement of the processing power of the Bitcoin network) that has decreased by more than 30% since the halving, more and more miners are likely to stop their operations, their activity becoming less and less profitable.
If the price of Bitcoin does not rise, those remaining could use even more machines in order to continue to remain profitable, which could worsen the energy impact of Bitcoin across the world.
Less energy-consuming solutions are being implemented
However, some solutions to limit this impact have already emerged. For example, more and more crypto-currencies (Tezos, EOS, Cardano…) decide to use a validation model called proof of stake or Proof of Stake in English, wanting to be less energy intensive and more scalable. This will also soon be the case for Ethereum, the second largest currency after Bitcoin, which has decided to switch to this validation model for version 2.0 of its blockchain scheduled for July 2020.
Some countries such as Ukraine have it’s up to them to take advantage of crypto-currency mining in order to fight directly against digital waste. According to the Ukrainian energy ministry: “This would not only maintain the guaranteed charge on nuclear power plants, but also ensure that companies can attract additional funds ”.
As the health crisis has led to a sharp drop in electricity consumption in Europe, crypto-mining could become an effective way to create significant secondary income for power and nuclear power plants that already have the necessary infrastructure and access. direct to an energy source.
Although Bitcoin is often criticized for its negative impact on the environment and its high consumption of electricity, and even though halving may make this situation worse, the Covid-19 crisis has demonstrated that crypto mining -currencies can offer some businesses new opportunities and can prove to be an interesting way to limit the waste of energy.