Saturday, November 25, 2017

The black hole cost of mining Bitcoin that no one is talking about

One of the more lucrative businesses that have sprung up in 2017 is that of Bitcoin, and other cryptocurrency mining.  In fact in areas where governments subsidize cheap electricity (Russia, China, and Venezuela), these mining operations have grown and multiplied substantially.

However as most of us know regarding Bitcoin, as the volume of produced coins increase, the time and duration to mine the remaining coins lengthens.  And in an interesting study out on Nov. 23, the current electricity use incurred for Bitcoin mining operations now exceeds the total combined output of 161 nations, and by February of 2020 could exceed the entire amount currently produced by the entire world.

Bitcoin’s ongoing meteoric price rise has received the bulk of recent press attention with a lot of discussion around whether or not it’s a bubble waiting to burst.
However, most the coverage has missed out one of the more interesting and unintended consequences of this price increase. That is the surge in global electricity consumption used to “mine” more Bitcoins. 
According to Digiconomist’s Bitcoin Energy Consumption Index, as of Monday November 20th, 2017 Bitcoin’s current estimated annual electricity consumption stands at 29.05TWh
That’s the equivalent of 0.13% of total global electricity consumption. While that may not sound like a lot, it means Bitcoin mining is now using more electricity than 159 individual countries (as you can see from the map above). More than Ireland or Nigeria.
If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption. – Power Compare UK
To keep up with this demand, alternative forms of energy would be needed to fuel cryptocurrency mining, possibly within just a years time.  Because if not then sovereign governments would surely need to get involved as the current global grid system is inadequate to facilitate a doubling of its electricity output.

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