How much Electricity is consumed in Bitcoin Mining (Explained By Pieta)?
With the growing popularity of bitcoin and the increasing interest in its mining, electricity consumption has now become a burning issue as the bitcoin mining process consumes a huge amount of electricity.
This matter of Electricity cost in Bitcoin mining is full of uncertain and complicated values which makes it difficult to calculate the exact electricity expenses involved in the process. Yet we have tried to present some estimations and assumptions about the same.
Let’s try to determine the amount of electricity required for mining one Bitcoin.
The cost of Bitcoin mining is directly related to Bitcoin difficulty, which is the figure used to show how hard it is to find a hash that will be lower than target defined by system, calculated with Bitcoin’s protocol and stored in each block of Bitcoin as each block has a packed representation (called “Bits”) for its actual hexadecimal target.
This value identifies just how many average hashes are required by a miner to get the valid block. It is adjusted every 2016 blocks (roughly two weeks) in order to maintain the mining competition (difficulty) in the line of approx block intervals of 10 minutes.
The formula D * 232 /600 is used to calculate the average number of hashes needed to find a block within 10 minutes.
The S9, which is the most efficient mining software in, produces about 14 TH/s (14x10¹²) by consuming around 1372W electricity. And the overall production presently stands at 1.14x10¹⁹. Dividing this figure by 14x10¹² will give us the maximum number of S9 miners currently in use, which is 800,000, all of which consume approx 1,100 MW in total.
According to the International Energy Agency, the total energy consumption globally in 2017 was 158,714,610,000 MWh. As compared to that, giving today’s difficulty standard, the Bitcoin network can be expected to consume roughly 9,636,000 MWh electricity over a year, which is a small yet significant part of the overall consumption.
So, to conclude Bitcoin consumes roughly 1,100 MW electricity per hour. This is just an assumption based on the processing and results of one mining equipment. We should not ignore the fact that there are multiple other mining software/hardware in play out there, which further add to the overall energy consumption in the mining process.
So, now the obvious question that arises is — How much does it cost to mine a Bitcoin?
In order for mining activity to be considered efficient, the mining rewards should be higher than the overall cost of mining, including the electricity cost. According to a rough estimate, it costs around $US3,600 to mine each Bitcoin block.
Now, a troubling fact here is that if the price of Bitcoin remains constant but the availability of miners keeps increasing, the electricity consumption will also increase, as more miners will be working for the same amount/price. The decreasing mining rewards further add to the troubles of the miners.
An obvious solution is somehow decreasing the consumption and cost of energy in Bitcoin mining, which can only be made possible by the use of renewable energy sources such as solar energy. As of today, most of the mining groups and pools use traditional sources such as oil for energy in their mining activities. These, in addition to being very costly, are known to have adverse impacts on our environment. Solar energy, on the other hand, is both affordable and eco-friendly.
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Pieta is a project which is working in the direction of encouraging the use of solar energy in the blockchain mining process with an aim to save the environment from its negative impacts as well as to make cryptocurrency mining more affordable and accessible.