Bitcoin is a cryptocurrency that has been around since January 2009. Over the years, its popularity has continued to grow, and more and more people are beginning to use it. But how much energy does bitcoin mining consume? Is Bitcoin mining really a danger to the environment?
In this blog post, we will compare bitcoin mining to traditional banking and see just how much power bitcoin mining really uses.
Bitcoin Mining and Electricity — The Evergreen Question
As you know, the Bitcoin network requires energy to function because it utilizes a Proof-of-Work (PoW) consensus mechanism. This means that in order for a transaction to be considered valid (included in a block), miners must compete against each other to solve math problem. The first miner to solve the problem is rewarded with newly minted bitcoins and transaction fees. This process of verifying transactions and adding them to the blockchain is called mining. It happens about every 10 minutes until another block is found and then repeats.
Over the past few years, lots of people have publicly raised concerns about the energy consumption of the Bitcoin network. Everything consumes energy, so it might help put things into context. What if we compared the energy consumption of Bitcoin with other industries such as the current existing traditional banking system.
Bitcoin Mining vs. Banking Energy Consumption
So how much energy does Bitcoin mining really use in comparison to the traditional banking system?
When you make a transaction at a bank, the bank verifies it and then records it in their ledger. This process uses a lot of energy, as it requires computers and other equipment to run.
On the other hand, Bitcoin mining only requires a computer and an internet connection. This means that it uses much less energy than traditional banking.
In fact, the latest studies show that banking consumes much more energy than the Bitcoin network.
According to a research report on the topic from Galaxy Digital, the energy consumed by the Bitcoin network is 113.89 terawatt-hours (TWh) per year, while the banking industry consumes 263.72 TWh per year. This means that despite popular beliefs, Bitcoin actually consumes less than half the energy of the baking industry. This is because older legacy systems are usually much more inefficient. An analogy would be washing the dishes by hand under the faucet instead of using a dishwasher. The dishwasher uses electricity and water, but much less water compared to running the faucet and much less energy. It’s more efficient overall.
It also turns out that Bitcoin mining uses less energy than the gold industry.
Another interesting finding is that gold consumes around 240.61 TWh per year, which is also a lot more than what Bitcoin consumes for the same period — in fact, that’s less than half. This doesn’t include the significant environmental damage caused by gold mining, especially illegal gold mining from drug cartels used to launder money.
This new data refutes claims of banks as a greener financial solution compared to the Bitcoin network. Of course, Blockchain technology still faces many challenges in optimizing processes and reducing the carbon footprint. That’s why it’s important that we all work towards building a new, alternative system for financial services that helps maintain our sustainable future. Many miners are working together to use a certain amount of sustainably sourced energy for Bitcoin mining. The Bitcoin Mining Council revealed that it successfully collected sustainable energy information from over 46% of the global Bitcoin network, as of December 31, 2021, in its latest voluntary sector survey. The results of this survey show that the members of the BMC and participants in the survey are currently utilizing electricity with a 66.1% sustainable power mix.
Why does the Bitcoin Network need energy?
As we’ve mentioned, Bitcoin mining is a process of verifying and adding transactions to the public ledger, called the Blockchain, by solving complex mathematical problems. Every time a miner solves a problem, they are rewarded with Bitcoin. To put it in perspective, each Bitcoin transaction consumes about 1,173-kilowatt-hours of electricity, according to a study, from MoneySuperMarket. In addition to that, the total energy usage of the Bitcoin network is less than 0.2% of all energy produced (source).
But why are those 1,173-kilowatt-hours of electricity needed?
Actually, their purpose is to maintain the network and help it be:
- Decentralized
- Robust
- Secure
- Live 24/7
- Fast
- Efficient
- Transparent
- With a fairer p2p rewarding system
A Greener Bitcoin Network: What can you do to reduce your carbon footprint?
As the world becomes increasingly digitized, the demand for energy-hungry crypto miners is only going to increase. That’s why today, Bitcoin miners are constantly finding ways to improve efficiency and reduce their energy consumption. For example, some miners have started using solar energy to power their operations — with Tesla being the latest example in the industry. Mining rigs powered by renewable energy sources like solar or wind power can greatly reduce the carbon footprint.
There are now several “green” mining pools that only use renewable energy to power their operations. By joining one of these pools, you can ensure that your mining is helping to support a more sustainable operation.
If you’re thinking about diversifying your portfolio, you can always look for new crypto to add to your HODL wallet. Just like there are green mining pools, there are also green exchanges that only list coins that have been mined in an environmentally friendly way. By using a green exchange, you can be sure that your trading is supporting sustainable practices.
You can also buy Bitcoin fastly and securely at any Bitcoin ATM location around the US and switch to a faster and more secure financial future.
Remember: One of the best ways to support green mining is to educate others about it. The more people who know about and understand the benefits of green mining, the more likely it is that more miners will switch to sustainable practices.
So there you have it! Bitcoin mining doesn’t use nearly as much energy as you might think. In fact, it’s actually more energy-efficient than traditional banking. So if you’re looking to save on energy costs, fintech might be a great option for you!