Bitcoin, mining a single coin is worth the energy of a family for 9 years
Huge consumption of electricity to create cryptocurrencies. And each transaction is comparable to 100 thousand credit card transactions. An increasingly unsustainable cost for the environment. CryptoMonday's analysis
09 Aug 2022
The creation – or mining – of a single new Bitcoin consumes as much electricity as a whole family in 9 years. This is stated by an analysis by CryptoMonday, which raises the alarm about the processes of mining the most well-known cryptocurrency that put climate defense at risk. There is another aspect: for bitcoin "miners" the mining activity is becoming less and less profitable: the competition between miners is intense and to mine a Bitcoin successfully you need to spend huge sums on electricity to power increasingly powerful computers.
According to CryptoMonday the energy consumption of the Bitcoin network would be at least 127 terawatt hours per year. Bitcoin consumes 707 kWh of electricity per transaction, which is 11 times that of Ethereum. In 2022, the average energy consumption per Bitcoin transaction can be as high as hundreds of thousands of Visa card transactions.
Index of topics
• Bitcoin mining, impacts on the climate and on "miners"
• The future of Bitcoin depends on energy consumption
• The difficult green road of cryptocurrencies
Bitcoin mining, impacts on the climate and on the "miners"
Bitcoin mining is the technique for generating new Bitcoins by solving complex mathematical problems that verify transactions in the cryptocurrency. When a Bitcoin has been successfully mined the miner receives a certain amount of Bitcoins. The market value of Bitcoin (despite the considerable fluctuations) has led to a corresponding increase in interest in mining. However, even for most "miners" the electricity consumption required to mine a Bitcoin is so high that it does not allow an economic return.
"Conceptually, it doesn't seem like Bitcoin mining has to require huge amounts of energy. In reality, the process is energy intensive. To ensure that the transaction verification process is secure, Bitcoin miners need to solve math problems that become increasingly difficult as more Bitcoins are mined," says CryptoMonday CEO Jonathan Merry. "This means that miners must use increasingly powerful computers to keep up with the competition. The large amount of electricity required to power these computers is one of the biggest obstacles to profitability in Bitcoin mining."
The future of Bitcoin depends on energy consumption
Many analysts believe that the high power consumption of Bitcoin mining is due to the proof-of-work algorithm used to verify transactions. This algorithm requires miners to solve complex mathematical problems to add new blocks to the blockchain.
In addition to the high cost of electricity, miners also have to deal with the fact that their chances of success are very low. With so many people competing for a limited number of Bitcoins, it's unlikely that anyone but the most dedicated (and lucky) miners will be able to make a profit.
For most miners the time, money, and energy required to mine Bitcoin simply aren't worth the potential return. Those interested in mining should know the risks of the enterprise: on the one hand, the value of Bitcoin could still fall and energy prices rise, making the business less and less profitable; on the other hand, new technologies could be developed that make mining more efficient and reduce the amount of electricity required.
Solving the gigantic problem of Bitcoin's energy consumption is a daunting task, but it's a task that the cryptocurrency community faces if Bitcoin is to secure a future, according to Merry.
The difficult green road of cryptocurrencies
Ethereum has long been attempting a green update of the mining method. Investors have been waiting for it since last year, sure that it will favor the so-called "flippening", or the overcoming of Bitcoin, currently dominant, by market capitalization.
The promise ties in with the merger of Ethereum's EH1 chain with a new chain to create ETH2 on a blockchain platform that enables cheaper, greener, and faster mining resulting in increased use cases, particularly for the world of decentralized finance.
Ethereum's technological upgrade involves moving from the energy-intensive proof-of-work mining method to the proof-of-stake method, which will make mining less energy-intensive. The "merger" or "melding" was expected in June and supported the growth of Ether's valuation all this year, but it was postponed, probably by a few months, but – according to the latest rumors – by 2022.