Status: 02/22/2021 11:08 am
The soaring of the virtual currency Bitcoin has very real side effects: In order for new crypto money to be created, mainframes are consuming more and more electricity – now as much as the Netherlands.
By Thomas Spinnler,
Bitcoin rushes from record high to record high. At times, the course recently scratched the $ 60,000 mark. The cryptocurrency is becoming more and more attractive for risk-takers. And the higher the price, the more worthwhile so-called Bitcoin mining, i.e. calculating new numerical codes for crypto money with the help of mainframes. But with success, the focus also turns to the costs and side effects associated with mining. Bitcoin may be a virtual currency, but the energy consumption required to produce bitcoins is real – and gigantic.
The Cambridge Center for Alternative Finance (CCAF) is working on this topic and has created an index on it. The Cambridge Bitcoin Electricity Consumption Index is supposed to estimate in real time how much electricity is currently being used for mining.
The calculated value is currently around 120 terawatt hours. That is more than the electricity the Netherlands consume each year. Germany’s annual electricity consumption is around 524 terawatt hours.
Around 0.5 percent of global electricity consumption in one year would be used for Bitcoin mining, with the CCAF based on consumption data from 2016 from the International Energy Agency.
Other cryptocurrencies are also energy-intensive
The range of estimates is wide, however, other experts calculate a lower consumption: According to the Bitcoin Energy Consumption Index by “Digiconomist”, a data collection by the economist and data analyst Alex de Vries, the estimated electricity consumption in 2021 is expected to be almost 78 terawatt hours. That would still correspond to the electricity consumption of Chile.
As electricity consumption increases, so do the CO2 emissions that arise during manufacture. It is very bad that so much energy is wasted in a lottery, quoted the BBC as saying David Gerard, who runs a news and blog site on blockchain and cryptocurrencies.
Mining makes the counter rotate
The fact that the power consumption is so astonishingly high has to do with the high effort involved in mining. In order to mine bitcoins, computers have to solve complex arithmetic problems. The more Bitcoins there are already, the more complex the calculations are to create new ones. This can no longer be done with the home PC.
Bitcoin miners therefore have the tasks performed by special computers with special computing power that are interconnected to form networks. The higher the bitcoin rate, the more lucrative mining is due to the high electricity costs.
Because these are relatively low there, Iran plays an important role in the competition for cheap bitcoins. Worldwide it is one of the ten countries with the largest mining capacity.
Does the state have to intervene?
However, the main role is played by China by far. According to Wayne Zhao, Chief Operating Officer of the crypto research service TokenInsight, China’s share of the total mining capacity has fallen from 80 percent to currently around 50 percent. And depending on how the electricity is produced, the higher the CO2 emissions.
Experts from the Technical University of Munich pointed out the environmental problem with prospecting as early as 2019 and also considered the factors energy consumption and climate change in a study. Christian Stoll, one of the authors, criticizes: “ The CO2 footprint is so large that it is reason enough to discuss the regulation of crypto mining at locations with CO2-intensive electricity production.”