According to a new study the activity of Bitcoin (BTC) mining by a bitcoin miner such as Bitmain Technologies will be consuming around 0.5% of the electricity generated in the world by the end of this year. With the minimum amount of power that the bitcoin network is estimated to be using being 2.55 gigawatts annually this is equivalent to the amount of electricity required to power the whole of Austria or the power required to run New York City or over six million homes in the United States for over a year. It is also about 30% of the world?s solar power capacity or one-eighth of the global wind power capacity.
Distributed ledger technology
As a peer-to-peer virtual currency with no centralized control bitcoin relies on a distributed ledger technology in recording transactions. The maintenance of this shared record is a competitive effort which sees thousands of computers spread across the globe humming as they perform calculations with a view to solving a math problem. The winner of this ?contest? gets rewarded with 12.5 Bitcoins for solving the puzzle in 10 minutes. These lucrative incentives have seen computers used for the activity being set up in warehouses. It is these computers that are consuming the vast amounts of power.
According to the author of the report Alex de Vries, a blockchain specialist and financial economist, when bitcoin mining turns out to be unprofitable due to high electricity costs there will be no guarantee that the activity will stop. This is because some miners will turn to unethical means such as stealing electricity. de Vries gave an example of a researcher who was able to mine bitcoins worth between $8,000 and $10,000 using the university?s supercomputer. This cost the educational institution $150,000 in electricity bills.
Per de Vries the bitcoin network could in the future consume up to 5% of the electricity produced across the globe generating environmental concerns. In the U.S. some states have imposed restrictions with regards to the mining of bitcoin. Plattsburgh for instance became the first U.S. city to ban the mining of virtual currencies after the cheap rates of its electricity saw many a bitcoin miner flock there.
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