We’ve all heard about Bitcoin millionaires. Elon Musk is one of the most recent.
After purchasing $1.5 billion (£1 billion) in cryptocurrency in early February, his electric car company Tesla generated a paper profit of more than $900 million (£646 million).
Its high-profile backing aided in driving the price of a single Bitcoin to more than $58,000. But it’s not just the digital asset’s price that has reached an all-time high.
So has its carbon footprint. As the magnitude of the currency’s environmental impact becomes more precise, Mr. Musk is facing backlash.
It also prompted many high-profile critics, including US Treasury Secretary Janet Yellen, to condemn the digital currency.
Furthermore, in order for traders to get the most out of their bitcoin trading, they may use platforms like Bitcoin Profit.
According to President Biden’s top economic adviser, Bitcoin is “an extremely inefficient way to conduct transactions,” with “the amount of energy consumed in processing those transactions being staggering.”
It is unknown how much energy Bitcoin consumes. Moreover, this is because cryptocurrencies are challenging to track by design.
However, the consensus is that cryptocurrency mining is a highly energy-intensive business.
Bitcoin consumes the amount of power similar to the Netherlands
The Centre for Alternative Finance at the University of Cambridge researches the burgeoning cryptocurrency industry.
It estimates Bitcoin’s total energy consumption to be between 40 and 445 annualized terawatt hours (TWh), with an estimated 130 TWh.
The UK consumes slightly more than 300 TWh of electricity per year, while Argentina consumes roughly the same power amount as the CCAF’s best guess for Bitcoin.
And most of the electricity cryptocurrency miners uses comes from polluting sources.
The CCAF team surveyed the people who managed the Bitcoin network worldwide about their energy consumption and discovered that roughly two-thirds of it comes from fossil fuels.
Massive computing power – and thus energy consumption – is built into the design of the blockchain technology that underpins cryptocurrency. Its basis is a huge decentralized network of computers.
These are the so-called Bitcoin “miners,” who not only enable the creation of new Bitcoins but also independently verify and document every transaction in the currency.
Bitcoins are the incentive miners receive for keeping this record accurate. Gina Pieters, an economist and a research fellow with the CCAF team, says it works like a lottery that runs every 10 minutes.
Data processing centers compete to complete and submit this record of transactions in an acceptable format to the system. Therefore, they must also pick a random number.
The first person to submit the correct document and number wins the prize, resulting in the next block in the blockchain.
Bitcoin intends to encourage more significant computational efforts
The idea is that the more computers are competing to maintain the blockchain, the safer it becomes because anyone trying to undermine the currency must regulate and operate at least as much computational power as the rest of the miners combined.
The value of Bitcoin is incomparable to any other asset, which makes it a valuable investment. In addition, more miners are joining the mining rig increasing the computational power.
The bottom line
According to several researchers, Bitcoin is just a speculation and can hardly get adopted as a reserve for currency.
However, if that ever happened, miners could be more affluent than the entire US, considering the computational power. Bitcoin mining uses a lot of energy that is not good for the environment, and it is right to think it might burst its bubble.
Bitcoin consumes roughly the same amount of energy as the Netherlands, but shifting to the PoS model is anticipated to save 99 percent of its energy costs.
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