Bitcoin power consumption is very high, there is nothing to shake. Is that justified?
Why does Bitcoin consume so much power? A question that can be answered in three words: Proof of Work. This is the mechanism used by Bitcoin to secure the network. After all, it is decentralized and therefore has no central authority to ensure that everything runs correctly.
Proof of Work
Proof of Work is part of Bitcoin mining. Mining requires a huge amount of computing power to solve mathematical problems. They have to try new combinations of numbers for each block in the blockchain until they find the right solution. When they find the right solution, they get bitcoin as a reward. As the number of miners keeps increasing and the difficulty of the problems increases, so does the power demand.
Another reason is the competitive nature of mining. Since there are many miners competing for the reward, they need to maximize their computing power to gain an advantage. This leads to an arms race using increasingly powerful computers and specialized hardware. So the more popular Bitcoin and the Blockchain become, the more power is needed. Depending on the statistics, Bitcoin power consumption is as high as that of entire countries. Can this still be justified in times of global warming?
Bitcoin power consumption: is it justified?
If Bitcoin were actually used as a global monetary system, this question would not have to be asked. Bitcoin consumes much less energy than, for example, banks, which need administrative buildings, employees, vending machines, paper and many other things to operate.
The problem with this is that de facto Bitcoin does not replace the global financial system, but rather joins the financial system and serves much more as an investment vehicle than as a global currency. So Bitcoin power consumption is simply on top of the rest of power consumption. And we can’t really afford that. Anyone who trades, holds, or otherwise handles proof-of-work cryptocurrencies should be aware of this.
Bitcoin energy consumption: what to do?
At this point, we can lapse into whataboutism and list everything else that wastes energy: Christmas lights, cars, the fashion industry, gyms – you name it. But that is of no use. Shut down Bitcoin? That’s not an option either.
The argument that “but a lot of Bitcoin is generated from renewable energies” is not entirely convincing either, since reliable figures are rare.
The fact is: Everyone has to take responsibility for their own energy consumption and emissions. If one already invests in cryptocurrencies, one can perhaps step back in other places. Perhaps you will generate enough profits with your investments to use the money for a better climate balance.
Image by Gerd Altmann from Pixabay
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