Cryptocurrencies take a lot of power to keep things going.
Tesla CEO and Cryptocurrency Cheerleader Elon Musk Shook the Crypto Market When He Said His Company Would May 13 TweetMusk cited an increase in the use of coal and other fossil fuels to generate the power used for mining as the reason behind his decision. Tweet Result: The price of bitcoin is down 14%.. In
bitcoin, ethereum,And other popular crypto hit record highs this year, raising concerns about the amount of energy needed to mine the coins. Bitcoin mining rig warehouses operate 24 hours a day, consuming more electricity than the whole of Argentina. As the energy bill for crypto mining rises, so too does the amount of carbon and waste adding to the growing climate crisis.
Here’s what you need to know about crypto mining and its energy use.
What is crypto mining?
When bitcoin is traded, computers around the world race to complete a calculation that creates a 64-digit hexadecimal number, or hash, for that bitcoin. This hash goes into a public ledger so that anyone can confirm the transaction for that particular bitcoin. The computer that solves the calculation first receives a reward of 6.2 bitcoins, or approximately $225,000 at current prices.
Other cryptocurrencies use similar mining techniques, which contribute to the overall energy use.
What is a Mining Rig?
It’s a barebones computer with multiple graphics cards or GPUs instead of the single-card standard. Rigs typically use powerful GPUs from Nvidia and AMD to handle the calculations and require high-wattage power supplies. The popularity of mining has led to a shortage of graphics cards.
Why is mining so energy-intensive?
For starters, the graphics cards on mining rigs operate 24 hours a day. It takes a lot more power than just browsing the internet. A rig with three GPUs can consume 1,000 watts or more of power when powered on, the equivalent of a medium-sized window AC unit running on.
Crypto mining businesses can have hundreds or even thousands of rigs in one location. A mining center in Kazakhstan is equipped to operate 50,000 mining rigs.
Rigs not only carry electricity, they also generate heat. The more rigs you have, the hotter it will get. If you don’t want your rigs to melt, you need to do something cool. Many mining rigs have several built-in computer fans. But if you have multiple rigs, the room heats up quickly, requiring external cooling. Smaller operations, such as those carried out by individuals, may occur from a normal standing fan. However, mining centers require a lot of cooling, which requires even more electricity.
How much energy does it take?
Digiconomist’s Bitcoin Energy Consumption Index estimates that it takes 1,544 kWh for one bitcoin transaction to complete, or the equivalent of about 53 days of electricity for the average American household.
To put it in money terms, the average cost per kilowatt hour in the US is 13 cents. This means that a bitcoin transaction would generate over $200 in energy bills.
According to an analysis by Cambridge University in February, bitcoin mining used more energy than Argentina. At 121.36 terawatt-hours, crypto mining will be in the top 30 countries based on energy consumption.
Why is consuming so much energy harmful to the environment?
Fossil fuels account for more than 60% of the energy sources in the US. The majority of that percentage is natural gas and the minority is coal. Carbon dioxide produced by fossil fuels is released into the atmosphere, where it absorbs heat from the Sun and causes the greenhouse effect.
Since mining rigs consume more energy, nearby power plants must produce more electricity to compensate, increasing the likelihood that more fossil fuels will be used. States that have struggling coal power plants, such as Montana, New York, and Kentucky, are trying to capitalize on luring crypto mining companies.
What is being done about this problem?
not much. A third global cryptoasset benchmarking study from the University of Cambridge found that 70% of miners based their decision on which coin to mine on the daily reward amount. Energy consumption was only 30% of their choice.
However, access to renewable energy at a low cost is what attracts crypto miners. China’s Sichuan province has the second largest number of miners in the country due to its abundance of cheap hydroelectric power. Its rainy season helps generate so much energy that cities are looking to relocate to blockchain firms to avoid wastage of electricity.
The operators of Ethereum, the second most popular blockchain behind bitcoin, are doing something to change the amount of energy consumed by their miners. Ethereum 2.0 is an upgrade that will be completed this year or in 2022. Instead of computers trying to solve the computations – referred to as proofs of work – computers would be randomly selected to create blocks for the blockchain, while computers that were t selected would validate those blocks created.
To make sure the miners do their job, each miner has to stake 32 Ethereum coins, also known as ether, which is equivalent to $85,000, hence the term proof-of-stake for this protocol. called steak. This change reduces the amount of energy required for Ethereum mining.
Which other cryptocurrencies are more energy-efficient than bitcoin?
An increasing number of coins – there are over 10,000 of them – use the proof-of-stake protocol that will transition to Ethereum 2.0, resulting in a drop in power consumption.
For example, Cardano uses its own proof-of-stake protocol and consumes 6 gigawatt-hours annually. To put this in perspective, Cardano’s energy use is a GWh and a half shy of providing enough electricity for a year for the South Pacific island country of Niue, with a population of 1,620 people. By comparison, bitcoin uses 126.09 terawatt-hours annually, which is comparable to the amount of energy used each year by Pakistan, with a population of 225 million.
Cardano hit record highs following Musk’s May 13 tweet as it was seen as an eco-friendly alternative to Bitcoin. Its price peaked at $2.47 on May 16, but its value declined and is currently at $1.57.