The quantity of energy Bitcoin mining consumes, and the related detrimental impact on the environment, is of great concern. Specifically, electricity continues to make up the largest cost associated with Bitcoin mining. Thanks to advances in quantum computing research, reductions in energy consumption and costs might be just around the corner.
Also Read: NIST Starts Developing Quantum-Resistant Cryptography Standards
Bitcoin Mining and Energy Consumption
In addition to Bitcoin’s block size debate, the high cost of mining — as well as its impact on the environment — constitutes a critical issue.
Mining provides an essential service to Bitcoin. Without miners, the Bitcoin network would collapse. To mine, miners must connect to the Bitcoin network, and sync miners or nodes. The job of the miners is to authenticate every transaction, build and keep all the historical blocks, and agree on which blocks to add to the blockchain.
For their work, miners receive a reward of 12.5 bitcoins per block.
Miners accomplish their task by computing multiple SHA-256 hashes. Performing these tasks requires miners to consume large amounts of energy.
From Bitcoin’s beginning, miners have tried various types of technology and hardware to reduce energy consumption. For example, individual miners started by using central processing units (CPUs). Successively, miners moved to graphics processing units (GPUs), field programmable gate arrays (FPGAs), and application-specific integrated circuits (ASICs).
While each of these new technologies brought speed gains, they also increased the total hashing power of the network dramatically. The cost of specialized machines and the energy they consumed made mining mostly unprofitable for individuals.
As a result, mining has moved away from the individual miner and towards factory-scale mining centers.
Energy Costs Are Key
Nevertheless, in spite of technological advances, the energy cost issue remains critical. “When determining where to set up a mining center, the three biggest considerations are: climate, cost of electricity, and network position. In particular, you need a cool climate so that cooling bills will be kept low. You need cheap electricity,” according to Professor Arvind Narayanan.
Thus, many bitcoin mining companies set up data centers in cold climate regions, or in countries with relatively cheap electricity. For example, as the Bitcoin Group stated, “Electricity is often the largest cost associated with Bitcoin mining, to minimize this Bitcoin Group actively seeks to operate in locations with low-cost electricity. Access to such low-cost electricity is most commonly found in China, which is why the majority of Bitcoin Group’s operations are based there.” The Bitcoin Group also operates in Iceland.
Quantum Computing and Bitcoin Mining
Quantum computers take advantage of unusual phenomena, such as:
- Electrons can be both waves and particles
- Objects can exist in multiple places at once
- Objects can remain connected even when great distances separate them. This property is known as entanglement.
Because of these properties, quantum computing will make computing more secure using quantum encrypted communications, execute digital transactions almost instantaneously, and solve intractable computational problems. In addition, it will significantly help us reduce energy consumption in computing.
Indeed, the École Polytechnique Fédérale de Lausanne forecasts that thanks to the quantum tunnel effect:
“By 2017, quantum physics will help reduce the energy consumption of our computers and cellular phones by up to a factor of 100.”
“Quantum Tunneling is an evanescent wave coupling effect that occurs in quantum mechanics. The correct wavelength combined with the proper tunneling barrier makes it possible to pass signals faster than light, backward in time,” The Anderson Institute explains.
Google has also started exploring new approaches to building a full-scale multipurpose quantum computer. Many believe that thanks to Google’s research, the quantum computer age is imminent.
In effect, according to MIT Technology Review, “Researchers at Google may unveil a truly powerful quantum computer by the end of next year.”
Quantum computing will soon become a reality that can help to reduce Bitcoin mining energy consumption and thus benefit the environment. Certainly, this development, in turn, will also affect the economics of mining. As a result, more individuals might wish to start mining, thereby increasing decentralization, as perhaps Satoshi Nakamoto had envisioned.
What are your thoughts on how the advent of quantum computers will impact Bitcoin mining? Let us know in the comments below!
Images courtesy of Bitcoin Group, Shutterstock.