The Bitcoin network’s energy consumption spiked as the cryptocurrency’s price surpassed $66,000, as world leaders sought to tackle climate change.
The price of the world’s largest cryptocurrency reached $ 66,700 at the end of October, breaking the record set in mid-April of this year. Bitcoin’s rally also helped Ether, the second largest cryptocurrency, rise to more than $4,054 a coin.
This also leads to many people racing to mine cryptocurrencies, which increases the energy consumption of the entire network. Bitcoin’s hashrate is accelerating and is likely to hit a new high, along with record energy consumption, according to data from the UK’s University of Cambridge.
The Bitcoin system uses the same amount of electricity as the entire Netherlands, an uncomfortable fact amid world leaders attending the COP26 climate change summit in Glasgow, Scotland.
Bitcoin and Ethereum are operating under a proof-of-work (PoW) method, in which miners use computers to solve complex math problems to validate transactions and receive new coins as a reward. This method requires a highly configurable computer system or specialized equipment, which consumes power.
The higher the Bitcoin price, the more attractive the mining activity. Bitcoin miners’ revenue in October spiked to $1.72 billion, close to the $1.75 billion peak hit in March.
“Hashrate and energy consumption will soon reach new peaks at current Bitcoin prices, as more and more people join mining,” said Alex de Vries, founder of Bitcoin energy data services company Digiconomist.
In addition to using huge amounts of electricity, cryptocurrency mining also creates a lot of electronic waste, as miners constantly replace old machines with new, more efficient products. Digiconomist’s report shows that one Bitcoin transaction can generate as much waste as throwing away two iPhones.
An increase in energy consumption does not mean an increase in carbon emissions, especially as many large businesses in the Bitcoin mining industry are looking to transition to renewable energy sources and form the Bitcoin Mining Council (BMC). ) to promote greener cryptocurrency mining.
Cambridge University 2020 data estimates that around 40% of Bitcoin mining uses green energy. BMC said last month that the rate has now increased to 58%, making Bitcoin mining one of the greenest industries in the world, despite many critics still arguing that the energy poured into cryptocurrency mining can used elsewhere.
The crackdown on crypto mining in China in the middle of the year also pushed Bitcoin to become greener. Much of the mining in the country relies on coal-fired power, but the government’s ban forces many miners to move to the US, where renewable energy is the cheapest source of electricity.
Environmental efforts in the financial industry also make a difference, as low-energy platforms attract investments from big names.
Ethereum is gearing up for an ambitious upgrade, Ethereum 2.0, in which the network will transition to a proof-of-stake (PoS) method that relies on people already holding cryptocurrency to process new transactions. This method does not require a power-consuming computer system, which is more environmentally friendly than current PoW.
Diep Anh (follow Business Insider)