If cryptocurrencies such as Bitcoin or Ethereum continue to be mined, they will soon consume as much electricity as the medium-sized EU countries. Chinese researchers have proposed countermeasures.
Cryptocurrencies like Bitcoin are virtual, they only exist in the computer’s memory, but this does not mean that they have no obvious impact. In 2024, China’s Bitcoin mining (that is, processing transactions in exchange for Bitcoin) may consume the entire energy of Italy.
This is published in Nature Communications A Chinese-American research team has simulated the future development of Bitcoin with a very complex model.
The researchers said that the current growth of Bitcoin will continue for several years, and if China does not take urgent action, it will invalidate the country’s efforts to mitigate the impact of climate change.
Bitcoin is based on blockchain technology, which consists of a distributed transaction database and is very secure because it can be replicated on thousands of computers. In this way, transactions conducted in digital currency have real cash value, but for them, computers must solve certain programming tasks. In exchange for the transaction, the owner of the machine, the Bitcoin “miner”, was paid.
By 2024, Bitcoin mined in China may consume energy equivalent to the energy consumption of the entire Italy
In countries with low electricity costs, and for people who can use powerful hardware, perform calculations as quickly as possible, and save energy, this is rewarding.
It has long been known that the growing Bitcoin industry desperately needs energy. A research team led by Jiang Shangrong of the University of Chinese Academy of Sciences raised the question of how far consumption can grow.
In their model, the researchers applied four different scenarios, which include not only market considerations, but also possible policy responses. Without political intervention or an unforeseen price plunge, the Bitcoin boom will reach its peak in 2024.
By that time, in China, cryptocurrency mining may consume 297 terawatt hours of electricity each year, no less than 5% of the country’s electricity needs. This means that 130 million tons of carbon dioxide are released in the process.
In the long term, this research shows that the attractiveness of the business will decline, in part because the design of cryptocurrencies makes the calculations necessary to make it more demanding over time. But until then, cryptocurrency mining was a climate hazard.
The author believes that cryptocurrency mining requires a carbon tax or minimum energy efficiency requirements. The team believes that it would be a better choice if pumping is allowed only in areas with a high proportion of hydroelectric power generation instead of areas where it usually occurs, because the area is mainly derived from coal-fired power plants.