Bitcoin mining methods have become a sensational subject of discussion in the crypto community as some individuals, institutions, and governments are letting out their predisposition towards it.
The cryptocurrency market in its entirety is a very large technical industry that requires a great deal of energy to acquire digital assets and keep track of activities in the blockchain through data computation.
Bitcoin today, is the most valuable digital asset that controls about 45 percent of the total value in the entire crypto market. The increasing attention the crypto asset is receiving constantly triggers the need for more electrical energy for Bitcoin mining and computation.
The energy consumption rate of Bitcoin and the entire cryptocurrency market has spurred a controversial debate globally, with Tesla denouncing the leading crypto asset and the Chinese government clamping down on Bitcoin. The recent events lead to this question…
How Much Energy Does Bitcoin Mining Consume in Comparison to Other Industries?
Well, the cryptocurrency industry no doubt is an online-based one and demands that energy be consistently pumped in to keep the system running but critics have cried out about its negative impact on the environment.
One of such Critic, Alex de Vries, the founder of DigiEconomist stated at one time saying, “I think Bitcoin consumes half as much energy as all the world’s data centres at the moment.”
Fossil fuels are the major electricity generators for Bitcoin mining. The use of fossil fuels increases as the value of the leading crypto surges as miners will be required to mine more coins to meet the demand of the growing users. However, Bitcoin miners are rapidly employing other energy sources.
To be exact, the energy consumption rate of Bitcoin mining annually is estimated at over 120 Terawatt Hours (TWh), according to a study by Cambridge University.
In another report from Galaxy Digital, the yearly electricity consumption involved in the Bitcoin ecosystem is pegged at about 113.89 Terawatt per hour each year (TWh/year), this data was confirmed by the International Energy Agency (IEA).
However, other related industries consume an even greater deal of energy to run their transactions. Gold mining consumes just about twice the rate of Bitcoin’s required energy. Gold mining is estimated to consume 240.61 TWh/yr while the banking sector’s energy use is about 263.72 TWh/yr.
Is Bitcoin Mining Affecting the Environment as much as the Claims?
Several critics have calculated the energy usage for Bitcoin mining and they believe that the energy can be used to power a small country like Argentina.
However, the major concern isn’t the energy consumption according to critics, but the type of energy that Bitcoin miners use and their impact on the environment.
CoinDesk however, has published a report which stated that a sizable amount of the power used in Bitcoin mining comes from renewable sources. This report is backed by a study made by CCAF which also estimated over 39 percent of the mining energy coming from renewable sources and that over 76 percent of Bitcoin miners employ renewable energy generators.
Today, Bitcoin is estimated to consume over 0.58 percent of the total energy the world consumes but this isn’t uncommon as video game consoles, lighting, and construction consume so much more.
The mining of Bitcoin is a cumbersome process but it fulfils a need as a secured store of value. The paramount reason that leads to the high energy consumption in crypto mining touches the fact that the blockchain is developed to secure transactional data and prevent cyber attacks that seek to infiltrate the system.
In conclusion, Bitcoin mining just like other industries that consume so much more energy, an alternative should be sought to reduce the amount of consumable energy whilst maintaining the system. It isn’t necessary to draw down the curtains on them.