The world is changing at a speed that just 20 years ago was probably unimaginable. Often living in the strict everyday life we do not realize that most of the things we have around us and use, only a few years ago did not even exist. Technology makes great strides in a very short time but this acceleration must be analyzed and addressed. This is particularly true for the challenge that from now on will be the main one for the whole world: climate change.
Of climate change, or even better of climate crisis fortunately we hear more and more often, but to avoid these words being just “bla bla bla”, quoting Greta Thumberg, it is necessary to act. National governments have to do it, the big greenhouse gas emitters have to do it, but in our own small way we citizens too should start to be more aware. They are all tiny drops of a huge ocean, but that doesn’t mean they aren’t important.
This premise is to speak of an evolution, or rather a revolution, also in the economic field. THE Bitcoin they are an interesting reality that exploits a technology that can be used in countless other fields. Their rise, however, coincided with the constant increase in demand for electricity to support the mining of the same.
Let’s start with the final figure: the process of creating Bitcoins requires 91 terawatt hours of electricity per year, which is more than that used by all of Finland. Of course, even all the most normal financial transactions need energy, but looking at it in black and white it seems that nothing compares to the energy expenditure of the most famous cryptocurrency. A comparison has tried to do it Statista, which has highlighted how the energy need for one million Bitcoin transactions is 1,810.74 kw / h, against 148.63 for the same number of transactions with the VISA circuit.
Find more statistics at Statista
But why does “mining” Bitcoins consume so much energy? From a technical point of view, the reason is that “mining” simply means making an algorithm work inside a computer. The more powerful this is, the more you can undermine. This of course is a trivialized explanation of the operation, but a good analogy, highlighted in this article, is that between the creation of Bitcoin and the Casino.
Imagine that you are in a casino and everyone who plays has a die with 500 sides. The winner is the first person to roll a number below 10. It goes without saying that the more power you have, the more guesses, or rolls of the dice, you can do per second. The Bitcoin network is structured to make everything a little more complex based on how many more miners participate. However, this complexity also translates into safety for the user.
The process of creating Bitcoins requires 91 terawatt hours of electricity per year, which is more than that used by all of Finland
Clearly this is not meant to be a detailed explanation of the mining, but it wants to give an idea of the reason why to date mining Bitcoin means consuming more energy than all of Finland combined, with its 5.5 million inhabitants. A trend moreover that it has been growing steadily for years. The analysis is made by the University of Cambridge which has developed the Bitcoin Electricity Index, which aims to monitor the monthly energy consumption for the mining of Bitcoins.
All this aware that Bitcoin’s real electricity consumption cannot be directly measured for several reasons. In primis because the so-called miners can operate under pseudonyms without the need to identify themselves or they can use different hardware devices with different energy efficiencies for which there are no reliable sales or distribution data. The electricity consumption due to Bitcoins can therefore only be estimated.
In the CBECI estimates we see how the percentages between states are always the prerogative of China. In recent years, however, also in other countries there has been an intensive production of Bitcoin, just think that in September 2019 China held more than 75% of production, with the United States at 4.1%. By April 2021, China had fallen to 46% and the United States had risen to more than 16%. A trend that will presumably continue, given the Chinese restrictions on the most famous cryptocurrency.
The main problem, then, is what appears to have been an escalation in the last ten years technical and technological needs to mine Bitcoin. If in 2011, in terms of electricity, even a simple home PC was enough to do the mining of a Bitcoin, now it is no longer possible. Specialized machines are needed, with great computing power but even more with an important cooling system, precisely to avoid overheating due to constant operation. The mining so, in fact now it happens in gigantic data center owned by companies or individuals.
A further aspect then, is due precisely to amount of hardware used for a shorter or longer period and then set aside. More computing power means a need for newer and faster machines, resulting in the creation of electronic waste. As reported by the New York Times, Alex de Vries, a French economist, estimated that every year and a half, the computing power of the hardware of mining doubles, effectively making older machines obsolete in a short time. According to his calculations, in early 2021, Bitcoin alone generated more e-waste than many medium-sized countries.
In short, the cryptocurrencies represent the future, the blockchain is a technology already useful in countless fields but if we want to try to have a sustainable future, the issue of Bitcoin and their relative mining it must be analyzed in depth to ensure that this too does not impact our climate.