Bitcoin Mining is thrice more expensive than Gold mining
Despite facing several crypto winters, the ‘gold of the digital era- Bitcoin’ and crypto mining has garnered a lot of attention around the globe. However, this attention has not always been positive. Bitcoin maker Satoshi Nakamoto presented Bitcoin as a hope for the human society which is tainted by fraud and corruption but it seems that the evolution has come with a price. A research paper was written by Max Krause, a research engineer at the Oak Ridge Institute for Science and Education for The Nature International Journal of Science. In it, he mentioned that the energy and carbon costs for cryptocurrency mining are three times the cost for mining gold and copper combined.
What is cryptocurrency mining?
Basically, crypto mining is the computational process of confirming and verifying a transaction and adding it to the Blockchain public ledger. The transaction is time-stamped and broadcasted to the network. BTC miners are individuals or groups that perform computations on transactions. The fastest BTC miner is rewarded with a commission from the Bitcoin pool for adding a new verified block to the ledger.
Energy consumption: An issue for cryptocurrency mining
Bitcoin uses the concept of Proof of Work (Pow) to validate transactions from Bitcoin mining pool, which is highly energy intensive. The research paper by Max Krause stated, that after taking out an average of all days falling in between 1 January 2016 to 30 June 2018, Bitcoin, Ethereum, Litecoin and Monero mining required 17, 7, 7 and 14 MJ [megajoules], respectively to generate 1USD. On the other hand, it was estimated that mining aluminum, copper, gold, PGMs, and REOs required 122, 4, 5, 7 and 9 MJ [megajoules] to generate 1USD. As the graph suggests, Bitcoin mining consumes more than thrice the energy that is consumed by gold mining.
Source: Nature Sustainability
The researchers also stated that the estimated energy utilized by Bitcoin mining machine is likely at the lower end of the spectrum as the study did not include energy costs for cooling equipment used in crypto mining as well as maintenance and infrastructure costs.
Cryptocurrency mining affecting the environment
There have been countless instances when the global media and environment experts criticized the extravagant energy requirements of crypto mining. The recent criticism comes from a study published by the University of Hawaii. The report mentioned that the incorporation of Bitcoin at the slowest rate at which other technologies of the modern era have been incorporated would yield a cumulative emission enough to warm the planet above 2°C in just 22 years.
Given such adversaries, the arms race to mine bitcoin shows no sign of ending. It is evident from the prevalent competition between the best Bitcoin miners across the globe to earn more Bitcoins faster. The study by Max Krause also stated that energy consumption by the Bitcoin mining machine will continue to rise in the future. The paper said, “While the market prices of the coins are quite volatile, the network hash rates for three of the four cryptocurrencies have trended consistently upward, suggesting that energy requirements will continue to increase.”
As the energy requirements increases, the costs incurred for bitcoin mining also rises. This problem is being catered to by KIBIS self-service kiosks. KIBIS is making an effort to decrease the costs incurred by crypto-currency mining by installing mining machines in their Blockchain-based kiosks. These machines will automatically mine KIBIS tokens without the assistance of a miner and are designed to consume less energy. Also, KIBIS will be strategically placing these machines in places where the electricity costs are less.
So what makes Cryptocurrency mining this expensive?
The reports predict that crypto mining is going to flourish in future but it seems that as BTC miners compete to earn Bitcoin, the energy requirements will continue to accelerate. The exponential growth in mining price is a consequence of rising hash rate, which is a measure of a miners performance.Hash rate adjustments can make Bitcoin mining exponentially more energy intensive. As the hash rate increases the chances of computing the mathematical puzzle required to earn Bitcoin also increases but along with it, the amount of energy required to run a Bitcoin mining machine also surges upwards.
Source: https://bitcoinchaser.com
Conclusion: Bitcoin vs Gold
Bitcoin maker Satoshi Nakamoto, offered the world with a whole new revolution to establish a transparent and efficient society. Naturally, Bitcoin is more flexible in terms of efficiency than gold because it can be mined anywhere in theory. This gives BTC miners an opportunity to earn Bitcoin faster by moving to a place that offers the best energy efficiency.
However, we must remember the consequences of crypto mining. Mining cryptocurrencies not only consumes a lot of energy, but it also leads to a bigger carbon footprint. Some measures are required to be taken to ensure that the costs incurred by crypto mining can be kept in check.
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