Why Isn’t Crypto Mined With Green Energy? It’s Not That Simple
Mar 21, 2023 7:01 am
Why Isn’t Crypto Mined With Green Energy? It’s Not That Simple
2 min read
According to Reuters, the entire Bitcoin network accounts for as much carbon emissions as the entire country of Greece. A recent study done by Cambridge University shows that Bitcoin’s electricity demand is increasing and that fossil fuels accounted for 60% of its energy mix in January 2022, 5% higher than the year before. There are a number of reasons for this.
1. Bitcoin mining is energy intensive
“Making new Bitcoin is a process called mining and it’s incredibly energy intensive”, explains Tom Wilson, Reuters Crypto currency correspondent. “It uses really powerful computers which are hooked up across a global network and they all fight against each other to solve very difficult math problems to create a new Bitcoin”. Through this energy intensive process, the Digiconomist’s Bitcoin Energy Consumption Index estimated that a single Bitcoin transaction uses 1 449 kWh of energy – equivalent to 48 days of electricity for the average South African household.
2. Bitcoin mining incentivises increased use of electricity
Speaking on the math problems that Bitcoin mining seeks to solve, UK technology editor, Alex Hern reported “The only reason you’re doing this calculation is to prove that you’ve wasted some electricity doing it. And the fact that you’ve proved that you’ve wasted some electricity, means that you’ve created something scarce – ‘proof of work’”. He further added “You get paid, currently, 6 Bitcoin (about R353 190,83) if you win the 10 minute lottery… You also win the ability to verify every transaction that’s happened in the last 10 minutes.” This leaves millions of computers around the world using electricity to try and win the lottery. Proof of work does, however, prevent fraudulent transactions.
3. Cooling systems
As these Bitcoin mining computers work very hard to mine the crypto, they often overheat. To prevent damage or disruptions in mining, miners use cooling systems to cool the computers. It is not clear how much electricity the cooling systems use.
4. Not enough renewable energy
Right now, the reality is that there just isn’t enough renewable energy in the world to cater for crypto mining. Crypto mining uses about 0,9% of the world’s entire energy supply. The world’s current renewable energy supply is about 1 000 TWh, which is less than half of the 2 277 TWh that cryptocurrency mining currently uses. Whether or not the responsibility to provide that renewable energy deficit should fall on crypto miners is another question altogether.
Cambridge’s study also found that 38% of Bitcoin mining does use renewable energy – which is much more than most industries. Many Bitcoin miners also use methods such as stranded energy and locations with sub-zero temperatures to reduce their energy consumption. Cathie Wood, Elon Musk, Jack Dorsey and Kevin O’Leary all advocate for Bitcoin mining and its move to the use of renewable energy.
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