One Bitcoin Transaction Now Uses As Much Energy As Your Home In a Week 🚨 This article is 6 years old...
One Bitcoin Transaction Now Uses As Much Energy As Your Home In a Week
3 min read
Updated: Nov. 18, 2017 at 3:31 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bitcoin is currently enjoying an overwhelmingly positive news cycle. It recently set two milestone valuations when it first passed the $6,000 mark before quickly surpassing $7,000. Moreover, it’s continuing to generate mainstream attention from retailers, investment institutions, and consumers.
Just last week, CME Group announced its plan for a regulated Bitcoin futures product, which lines up with other Bitcoin investment iterations being whispered about by other institutions. It’s been a profoundly dramatic year for Bitcoin, and everyone seems to be celebrating.
However, as Christopher Malmo recently explained in a Vice column, Bitcoin’s price increases aren’t the only thing setting new highs. Bitcoin is using astonishing amounts of energy to mine and process the abundance of Bitcoin transactions happening every day.
By design, Bitcoin is an energy inefficient and energy-intensive process. In other words, Bitcoin uses a lot of energy and it doesn’t use it particularly well; therefore, as its value increases so does its electrical output.
Just how much energy are we talking about?
A lot of energy. Malmo has made some startling discoveries about Bitcoin’s energy consumption. For starters, Malmo calculates that:
“215 kilowatt-hours of electricity is used for each Bitcoin transaction.”
While there are estimates on either side of this calculations, with more than 300,000 transactions each day any number in that range is going to add up quickly. For most people, kilowatt-hours are an abstract concept. Let’s consider some of the tangible comparisons that Malmo discovers.
At Bitcoin’s current valuation, Bitcoin miners could expend the annual energy output of Nigeria to mine new Bitcoins and continue to make a profit. Closer to home, each Bitcoin transaction can power a house and all of its appliances for nearly a week.
On an even more granular level, a bitcoin transaction can power a refrigerator for a year or it can fill two Tesla batteries. We could endlessly engage in these comparisons, and those models are only going to expand over time.
As the Bitcoin’s price has steadily risen this year, so has its energy output. There is a direct correlation between the value of Bitcoin and the amount of energy used to consume it.
How could it be that much?
There are several explanations for Bitcoin’s tremendous energy consumption. First, its decentralized nature means that it’s relying on a network of computers to achieve a singular task. While this decentralized network has many benefits including unparalleled security, reliability, and functionality, it still requires significantly more energy consumption than a centralized network.
Moreover, the complex cryptographic puzzles that comprise the task of crypto-mining are completed by CPU graphics cards that are one of the most energy-intensive components of a computer.
There are so many of these graphics cards being used to mine cryptocurrencies that PC gamers are having trouble procuring enough graphics cards to power their video games.
Bitcoin mining is using the most high powered computer components, and it’s using a lot of them. As Bitcoin’s value continues to rise, it becomes more profitable to mine the currency, so more people put their computers to work, which increases energy output.
Is there anything that we can do about this?
Of course, Bitcoin isn’t the only service consuming significant amounts of energy. Nearly any service operating at scale can utilize eye-popping amounts of money. For example, energy output from VISA transactions is equal to the output of 50,000 households. Still, within the general fintech realm, Bitcoin is really unparalleled in its consumption.
As technology continues to progress and mature, it’s likely that energy efficiency will be one of the developments that help assuage this problem. It’s possible that switching from a proof of work to a consensus model could improve efficiency, but it’s far from clear that this is the most compelling solution to the problem.
Bitcoin users tend to be forward thinking, conscientious tech enthusiasts so, at this point, awareness is our best solution. As the currency continues to scale, it will be important to move beyond awareness and to establish measures to ensure that Bitcoin includes environmental consciousness as a core element of its platform.
Posted In: Technology
