What is the energy consumption behind Bitcoin Mining?
There has been a lot in the news recently surrounding the energy consumption behind Bitcoin Mining with some claiming it consumes more electricity a year than Ireland.
While we don’t dispute the figures or the idea that Bitcoin Mining could be consuming more electricity than 20+ European countries. We will discuss why and how it is using the electricity and what would be the alternatives.
“Bitcoin mining is one of the few industries that is completely geographically independent meaning all you need is cheap electricity.“ — Andreas Antonopoulos
We looked into this and came across a YouTube video by the renowned bitcoin advocate Andreas Antonopoulos. He explains his thoughts behind what is happening and we will outline some of them here.
The only other industries that comes to mind are in the tech industry such as call centres relying on a “cloud based” Private Branch Exchange. This is where businesses outsource call centres to areas with cheap reliable workforces that are flexible. They are often created to meet Businesses demands and torn down just as fast.
“The decentralisation of Bitcoin is driving the decentralisation of energy production.” — Andreas
In China there are areas of cheap electricity because the power plants are being built for the future, 10–15 years down the line or even further in some cases. This creates a situation where some areas are currently creating way more power than they will require for sometime. Without a distribution network to move the power around it is often wasted. This is where Bitcoin mining has decentralised the energy market and allowed for power plants to pay back their costs much faster. This is more of a byproduct, but a reality.
Turning energy into an Alternative Store Value
The miners therefore have found a way to turn energy that may have gone to waste into an alternative store value. The energy consumed is what often would have gone to waste since mining with expensive electricity is uneconomical and wouldn’t be profitable without subsidies.
The decentralisation of Bitcoin means that current miner levels provide the services needed to keep Bitcoin secure while efficient enough to handle an exploding exponential growth at the moment and into the future. With the cost / reward getting harder each month the computing power will grow but only inline with what power resources are available to it.
With Bitcoin being a trending topic it is no surprise energy consumption would be a concern, but really is it such a bad thing? We should consider the other wasteful acts surrounding energy usage, if Bitcoin ends up decentralising the energy markets it will ultimately drive in a new era of modern power plants and solve the governments problem of who pays for it. The energy costs could ultimately come down, either way we will be bringing in an era of more energy efficient power stations that use alternative energy such as solar, wind and geo-thermal.
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