With all its glamour of being a decentralized currency and appreciating in value to over $20 000, you probably didn’t know Bitcoin’s mining process consumes a lot of energy.
Mining basically is a competitive process in which different users(miners) on the bitcoin network get into a race to add a transaction record to the system(blockchain). The winning miner would have generated a winning number among a vast amount of losing numbers generated by the computer. So, to generate a winning number first depends on a computer’s processing power (hash rate) and a bit of luck. In return for winning the competition, the winning miner is awarded in bitcoin by the bitcoin system and that’s how bitcoins are added into the circulation.
The carbon footprint as a result of this mining process is shocking. According to an index maintained by Digiconomist, just doing a single transaction of Bitcoin miners use electricity that can power as much as 27 houses.
Shocked?…..Check out these stats as well
If Bitcoin was a country it would have been consuming as much energy as Israel on an annual basis. That means the electricity used to mine bitcoins for a year by all the miners in the world can power Israel for a year.
What will the miners be actually doing?
As I explained previously, miners must find a certain winning number by generating numbers at
random continually to win newly minted bitcoins. Because fast computers can generate these random numbers more quickly, this creates an incentive for miners to use increasingly powerful computers to mine bitcoins. Hence these powerful computers use lots of energy.
In fact, the evolution of Bitcoin mining is similar to the way gold mining has changed over times. At one-time mining gold could be done by a person panning in a riverbed, but now mining is performed by large companies with expensive drills that require lots of power.
The world of cryptocurrency mining is battling with this problem hence solutions are being proposed such as the departure from using processing power(hash rate) as a basis for mining to using bandwidth(the amount of data that can be transmitted in a fixed amount of time) to mine.