The energy consumption from Bitcoin mining has been a pressing cause of concern for environmentalists and corporations all over the world. Recently, the Chief Digital Officer of Total, Gilles Cochevelou, tweeted that the consumption of Bitcoin mining now exceeds 30 TWh, which surpasses the electricity needs of Ireland.
The alarming signs do not end there either. The amount of consumption recorded is enough to supplement the energy requirement of Australia by more than 13 percent, which is a shocking feat considering that it’s a whole continent in itself.
As if that’s not all, the rise in energy consumption is reaching breaking point, resulting in blackouts especially in crises ridden countries like Venezuela.
What’s the deal with the energy utilization?
To answer this, we first need to understand what the term “mining” means when it comes to Bitcoins.
Despite the mental image that you get by its usage, Bitcoin Miners are not required to don a miner’s cap. Instead, they need to have their smart-hats on in order to complete a successful mining operation.
What they require:
- Technical prowess
- A rapid understanding of cryptographic algorithms.
- Computers that would put a gaming monster to shame (hence, the extremely high power consumption).
On a daily basis, mining computers receive a list of pending bitcoin transactions that are then turned into a piece of a mathematical equation. This information is shared through the blockchain network by distributed ledger technology (DLT), which allows everyone connected to the network to receive this information simultaneously.
Seeing how multiple miners are at work constantly, the information that is received immediately starts being worked on in order for the puzzle to be solved and for the transactions to be processed as they should.
Why is the process so demanding?
While posting a transaction through Bitcoin is easy, the backend process to complete it is somewhat complicated. Miners not only have to ensure that the transaction is posted but also have to confirm that no user of Bitcoin is spending money that they do not have. This information is then posted to the bitcoin ledger via the blockchain for everyone to see.
When you physically hold cash, you can easily track where you’ve spent it, because the money you spent is not with you anymore and no one will trade services or products with you if you try to hand them cash that is not there. Regardless of your level of mastery in the fine arts of persuasion, you can’t just make cash appear out of thin air, can you? (Not unless you’re the federal reserve).
In terms of digital currencies, this gets a bit complicated because the other party does not have the assurance of seeing a physical proof of funds unless it’s verified by the ledger.
That’s where miners come in. They verify the transactions performed to tell the recipient that the money was indeed processed.
While the process is complex, it only takes a few minutes to be completed at the backend because the pool of miners that are working on the network simultaneously are all highly efficient, and have the added pressure of solving the puzzle first and solving it correctly in order to receive Bitcoins of their own (that’s their reward for verifying the transactions and spending so much time after this process).
The first miner to find the solution registers it on the network to the other miners, who then will verify if the solution was correct and whether the sender of the funds had the money to begin with. When all of this is verified by a certain number of miners, the transaction is added to the ledger. The miners then proceed to the next set of posted transactions, and the process continues.
This whole process takes a certain amount of time and high performing computers to be completed. That is why Bitcoin mining operations have been consuming so much energy lately.
Climate change advocates continue to maintain that the energy consumption for Bitcoin mining will only increase over time. It was also estimated recently that it could increase the complete energy requirement of the whole United States within a short period of 18 months.
However, the projection does not mean that there’s no solution to this problem.
Well, there has to be a solution to this, right?
The Bitcoin community itself is working on a possible resolution to this by developing a blockchain solution called the Lightning Network.
Once fully functional, the Lightning Network is supposed to ideally work in a manner where the users could perform an increased number of transactions without using more power. The solution is yet to be completed, however. It is still difficult to estimate how soon it will be available for fully-fledged Bitcoin mining operations.
Maybe there are other several probable solutions to solve the energy consumption issues related to Bitcoin mining, but none are definite at this point in time.
That being said, one thing is for certain: while Bitcoin is here to stay, so is the high energy consumption and all the issues that come with it. The Bitcoin community is focusing on developing tangible solutions to this because other cryptocurrencies are here to play, and if Bitcoin doesn’t get to maintain its reputation for being the easiest to trade and most problem-free currency of all, then the other big players could take its place.
What’re your thoughts on the whole matter?