The bitcoin influence will soon hit the mark of 0.5% of global energy consumption and mining it could soon cost so much that it will no longer be profitable.
Researchers say that the absolute minimum for energy consumption from the bitcoin network today is 2.55 Gw, which is just a little bit less than energy consumption of Ireland.
By the end of 2018, they estimated that this number could rise up to 7.67 Gw what is comparable to Austria’s energy consumption. And that would be about 0.5 percent of global energy consumption.
That could be a problem for several reasons, including environmental problems. But de Vries has shown that this presents a special challenge for bitcoin miners themselves: soon mining bitcoin can be so expensive that the process simply ceases to be profitable. [Top 10 Emerging Environmental Technologies]
Why does bitcoin absorb all this energy? To understand this, you need to know a little about how the bitcoin network works.
Bitcoin is a peer-to-peer digital Currency. That means there is no Central Agency that records who owns what. Instead, bitcoin users rely on a common digital record of their transactions with a time stamp. And maintaining that shared record, adding a “block” to it every 10 minutes or so, is the work of the competitive efforts of thousands of computers around the world. These computers collectively perform quintillion calculations per second, each “mining”, trying to solve a mathematical problem that will give it the right to form the next block on the chain. The winner is awarded with 12.5 bitcoins every 10 minutes. This is more than $100,000 at the current rate of coins.
Given these incentives, bitcoin miners have filled warehouses with mining-related computers. These computers, even the most efficient, need a significant amount of energy to work. Some details, like how many of these computers actually get into a year, or what tricks various mining operations use to keep them cool, are industry secrets. But de Vries worked around that secrecy to find the data needed to calculate it.
“This calculation marks the first time bitcoin miner mining has been valued with ascending production numbers,” he wrote. “Given the constant secrecy of bitcoin miners, this can be a valuable addition to the tools to justify trends in bitcoin’s power consumption.”
De Vries also noted that when bitcoin mining becomes more expensive than profitable, this does not mean that all bitcoin miners will stop. Some miners, he noted, can steal electricity or otherwise figure out ways to mine bitcoins without any personal cost. For example, he said that one researcher mined bitcoin on a University supercomputer at a cost of $ 8000 to $ 10,000, which cost the University about $ 150,000. Other, less nefarious miners, he wrote, may continue mining for reasons such as anonymity or libertarian ideology.
However, de Vries wrote, bitcoin’s potential to become so energy hungry that it ceases to be profitable is a real threat to the network.