Bitcoin
News | 05/30/2018

Bitcoin Mining- A Threat to Energy Resources

About: Bitcoin is a digital currency introduced in 2009 by an anonymous person alias Satoshi Nakamoto. Transactions and issuance of this hypothetical currency is carried out collectively by the network with no central authority or banks. This innovative pay...  Read More

  

| News | Bitcoin Mining- A Threat to Energy Resources

Bitcoin is a digital currency introduced in 2009 by an anonymous person alias Satoshi Nakamoto.

Transactions and issuance of this hypothetical currency is carried out collectively by the network with no central authority or banks.

This innovative payment network enables people to perform transaction without revealing their personal information, hence provide a secure platform to perform illegal activities.

How to earn Bitcoins:

Bitcoin Mining is a significant way to earn Bitcoins. When a transaction occurs using bitcoins, the transaction record is added to Bitcoin’s public ledger of past transactions or blockchain. This process of adding new transactions into the block chain is known as Hashing. The ledger of past transactions is called the blockchain as it is a chain of blocks. The blockchain is necessary to confirm transactions to the rest of the network.

Every block mined (every 10 minutes on average) earns a reward to those who manage to solve the computational problem. This whole process is called Bitcoin Mining. While the reward is luring, there are some issues which stand in the way of this earning loot.

Impact of Bitcoin Mining on Electricity:

Extremely energy hungry by design, Bitcoin mining requires high speed processors which utilize custom bitcoin ASIC chips in particular. Hardware especially designed for this purpose consumes more electricity than what a person is likely to earn with Bitcoin mining.

But even participants who don’t win are expending a lot of power, therefore using just as much electricity.

In a bid to earn bitcoins, people all over the world use special software to solve hard cryptographic puzzles. Solving these puzzles to validate others’ transactions requires huge amount of calculation which makes use of these software which is highly power consuming.

Also as no single equipment has enough computational to compete for bitcoins, people are forced to unite in pools. Even when the efforts are combined, there is still a need to pay for electricity bills which often exceed the mining reward.

Just a single transaction uses as much electricity as an average household in the Netherlands uses in a month.

Financial economist and blockchain specialist Alex de Vries, focused on theamount of energy Bitcoins use, which is the need of an hour.

The estimated electricity that Bitcoin’s network consumes is at least 2.55 gigawatts every houraccording to the research. This amount is equivalent to the power consumption of the whole of Ireland.

By the end of 2018, the number is said to potentially increase to 7.67 gigawatts which is approximately equal to 50% of entire world’s energy consumption.

To meet the demand of growing electricity consumption, coal based electricity is prevelant. This, in turn, has a significant carbon emission factor, which thus impacts our global ability to reach our climate goals.

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