Mining Bitcoin: Tech Energy and Power

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For years, Bitcoin has been popularized as the face of cryptocurrency. After Bitcoin was introduced, it received critical backing from several prominent celebrity investment advisors and other notable figures, significant popularity followed. Once Bitcoin gained a platform, it gave rise to tens of thousands of other cryptocurrencies being mined and traded daily. Whether you believe in crypto’s or not, it’s hard to argue we’re not in the middle of one of the most exciting cryptocurrency trading times. While many participate in daily trading on platforms like Robinhood, Coinbase, CashApp, etc., not many of them have any insight into the technological know-how on creating a Bitcoin, or the Bitcoin energy required.

In reality, the computer-based miners who create bitcoins use vast amounts of electrical power and energy in the process. The energy-heavy process even leads some experts to suggest that Bitcoin harms the environment. The process, known as “mining,” requires computers around the world to complete rapid calculations to try to solve the same puzzle. It always takes 10 minutes, and the winner is rewarded with some digital bitcoin. Then a new puzzle is generated, and the whole process repeats for another 10 minutes (Bradbury, The Balance).

Breakdown of Bitcoin’s Power & Energy Output

As more people learn about Bitcoin and mining—and as the price of Bitcoin increases—more are using their computers to mine Bitcoins. As more people join the network and try to solve these math puzzles, you might expect each puzzle to be solved sooner, but Bitcoin is not designed that way. The software that mines bitcoin is designed so that it always will take 10 minutes for everyone on the network to solve the puzzle. As more people join the Bitcoin network and try to mine Bitcoins, it becomes harder, and more computing power and electricity are used for each Bitcoin produced. It minimizes downtime, so you can mine more efficiently. That means a near-constant cycle of electricity use.

To understand how to calculate the electrical energy used to power the bitcoin network, you’ll need to learn how Bitcoin creation works. First, you calculate how many sums are conducted per second to solve the puzzles. Then find out how much electricity it takes to do each sum. These sums are called “hashes” (Faife, CoinDesk). In early 2020, the computers on the Bitcoin network were cranking out close to 120 exahashes per second (Redman, BTC News). To calculate the cost of how much power it would take you to create a bitcoin, you need to know a few things first (Bradbury, The Balance). First, what is the cost of electricity where you live? Second, how much power would you consume? More efficient computer equipment uses less power, which means lower power bills. The lower the price of electricity, the less cost there is to miners. This increases the value of the Bitcoin to miners where the costs are lower to produce.

The Conclusion: To Be Determined

This is meant to emphasize that the energy and power utilized by Bitcoin and other cryptocurrency miners is a real, potential danger to the future global environment. Conversely, it may also leave a very low impact. The price that Bitcoin extracts in terms of energy use and environmental impact depends on how useful it will be to society (Bradbury, The Balance). Judging an ever-moving target is hard. The interest in Bitcoin continues to rise, which in turn leads to more power used to serve more people in the market. Therefore, ultimately deciding whether Bitcoin mining is worth the cost to the environment is still a very open question.