There has been a growing concern over Bitcoin mining energy usage globally. In the past few years a combination of factors, including more miners, better hardware and larger mining farms, have pushed Bitcoin’s electricity consumption to outrageous heights. Recently, Bitcoin enthusiasts from around the globe seek a more sustainable solution to the current power usage problems.
WHAT IS MINING
Bitcoin operates through a process referred to as a “consensus mechanism”. Simply put, thousands of computers retain the Bitcoin blockchain in it’s fullness in duplicate. Each of these PCs, popularly called nodes, compete to solve a complex Proof-of-Work algorithm. The one that is fortunate to completes the equation first adds the next block to the blockchain. The node who adds the next block receives a reward in BTC for their efforts. This reward is currently about 12.50 BTC.
As Bitcoin continues to gain more popularity, the number of miners on it’s blockchain skyrockets. A recent report shows the number of active miners just north about 300,000. You can expect this number to escalate as Bitcoin scarcity grows.
As a result of more miners in the network, this will eventually lead to more electricity consumption. A study once found that Bitcoin mining operations consumed around 2.55 gigawatts of electricity last year. This places Bitcoin’s energy consumption on par with countries like Bahrain, Ireland and Serbia.
In order to put this massive consumption into clearer perspective, we would say that if Bitcoin was a country, it would rank 66 out of 195 in terms of energy usage. You could power 4,892,381 US households with that much electricity, according to the most recent Digiconomist statistics.
The same statistics reveal that Bitcoin accounts for 0.24% of the world’s total electricity consumption. That’s approximately 144,866,845 KWh in usage over the last day. The world’s first crypto also creates a yearly carbon footprint of 26,248 kt of CO2. While this level of energy consumption sounds disturbing, it is actually just a tip of the iceberg when you consider future growth. Bitcoin mining is on the increase. Last year, the network saw an amazing 413% increase in electricity consumption globally. This increased network activity raises the hashrate. In turn, the network complexity level also increases. This complexity increase could push future Bitcoin transaction energy usage levels from 478 kWh per transaction today, all the way to around 900 kWh by the end of the year. These energy usages have raised a lot of concerns and have led so many individuals pushing for innovative and advantageous solutions.
A solution to this outrage is green energy mining operations. One of such operation came to limelight in February of this year when it was reported that Plouton Mining intends to create one of the biggest solar-powered Bitcoin mining factory in the world in California’s Mojave Desert. The operation would take advantage of the fact that the Mojave Desert is the 12th hottest place in the world.
In light of the decision, Plouton Mining CEO, Sammy Del Real, illustrated how solar powered mining facilities would benefit everyone. He explained how electricity costs are a major “setback of difficulty that everyone faces”. The team is determined to utilize their newly acquired 50 acres of desert land to make their concept a reality.
When talking about green energy Bitcoin mining projects, there is a lot to celebrate about. From a recent report published by the research firm ‘Coinshares’, renewable energy mining operations are on the increase. The report estimates that about 78% of all Bitcoin electricity usage comes from renewable sources. This same report also illustrates the migration of miners over the last two years towards more renewable-friendly countries. The report shows a great influx of miners leaving China for the US, Russia, Iceland and Canada. All of these countries offer more green energy alternatives to potential miners aiming to set up large farms.
A CHANGE FROM PROOF OF WORK (PoW)
Changing from the current Proof-of-Work consensus mechanism into another option is another strategy being contemplated by the Bitcoin community. One of such option is the Proof-of-Stake(PoS) algorithm. This consensus mechanism does not require computers to compete against each other to solve complex mathematical equations. In this case, nodes are actual users staking their tokens. In this system, nodes validate the blockchain using their staked tokens as collateral. If a node acts honestly, they are rewarded with more tokens in return. When a node acts irresponsibly or maliciously, they automatically forfeit their tokens.
This consensus mechanism is tremendously growing in popularity and is already in use by a quantifiable number of major cryptocurrencies. Noteworthy, Ethereum’s founder, Vitalik Buterin, announced that the ETH Blockchain will also update to a Proof-of-Stake system on or before 2021.
OPPOSITION TO PROOF OF STAKE (PoS)
It is very true that migrating to a Proof-of-Stake system amply reduces Bitcoin’s required energy consumption, however, there are many other concerns that would need to be addressed if this change should take place. Although, you must firstly, understand the dynamics of the Bitcoin community.
THE BITCOIN COMMUNITY
Prior to any change to occur in Bitcoin’s network, a consensus occurs within the mining community. This is a major setback that Proof-of-Stake proponents would need to look into, in order to alter Bitcoin’s code. Bitcoin miners spent billions of dollars on powerful ASIC mining chips. This expensive hardware would be useless if the Proof-of-Work algorithm did not exist. Miners have been reluctant to any changes that would alter what many in the past consider as Bitcoin’s doctrine. The entirety of Bitcoin network went on the defense while discussing whether to increase the block size 1MB in 2017. The argument later ended with the hard fork formation of Bitcoin Cash.
There are some technical issues that Proof-of-Stake systems need to handle as well. One of such issue is a long range attack. In this case, an individual uses a set of combination of old keys and a privately mined double-spend attack chain, to pull off a sizable heist. The attack was described by Buterin in his recent Proof-of-Stake analysis. This type of attack is not feasible utilizing a Proof-of-Work algorithm.
There is so much at stake when talking about altering Bitcoin’s code. Bitcoin blockchain is currently the most secure and largest in the world. This security is what keeps the faith in Bitcoin as the top cryptocurrency in the world. The Proof-of-Work algorithm, even though very wasteful, is a somewhat time-proven concept. As a result, you are more likely to see an increase towards renewable energy mining facilities instead of changing Bitcoin’s codes.
Sadly, the community has not been able to come up with a tried-and-tested solution to Bitcoin’s high energy problems. However, the increase of green energy initiatives signifies the hope that, as Bitcoin hits the mainstream, it’s energy critiques will be a thing of the past.