The electrical madness of bitcoin
Will cryptocurrencies such as bitcoin replace the dollar and the euro one day? Nothing is less certain, considering the frightening electricity consumption linked to the operation of these digital currencies.
In the December 2013 issue of Pour la Science, this section introduced the cryptocurrency named bitcoin and explained its general operation. The value of a bitcoin was then 100 euros; January 1, 2018, date to which will correspond the figures and calculations indicated here, the bitcoin was worth 11 500 euros!
Is it a speculative bubble or valuation with a real foundation? Two camps oppose each other. On the one hand, economists and currency experts believe that this is a "fraud" (a term used by Jamie Dimon, director of JP Morgan Chase Bank) and that everything will collapse, it that is, the price will drop sharply or even become zero. They are almost as numerous as in 2013.
On the other side, defenders of cryptographic currencies put forward various arguments to justify the value of bitcoin and its sisters. For them, the characteristics of cryptographic currencies - anonymity, irreversibility, decentralization, openness to everyone, issuance fixed in advance and speed of transactions - make new currencies with no equivalent, useful for a greater fluidity of money movements on the network and for a better overall functioning of the economy.
We must wait to determine which side is right. One point, however, raises concerns: the computer network that ensures the operation of bitcoin exchanges and their security has a significant consumption of electrical energy. Still on January 1, 2018, the specialized website Digiconomist evaluated it at 36 terawatt hours per year, which corresponds to the annual electrical expenditure of more than 3.4 million American households, or 0.16% of world electricity production.
This amount of energy burned by the network is expected to grow. An economic reasoning that we will detail below shows that the network's electricity expenditure is proportional to the price of bitcoin, with an adjustment period of several months for catch-up investments to take place when the price rises (a kind of inertia). As the price of bitcoin has been multiplied by more than 14 in one year, the adjustment of consumption linked to the current price has not totally taken place and will be done by multiplying by at least 2 or 3 in the coming months consumption current network. This is a certainty ... unless the price of bitcoin falls.
Between 70 and 100 terawatt hours of electricity spent per year!
This will lead to an electricity consumption of the bitcoin computer network between 70 and 100 TWh per year, equivalent to that of a country such as Belgium.
The estimates mentioned are approximate because it is impossible to know in detail who is spending electricity and how much for the extraction of new bitcoins.
Again, two camps compete for this evaluation. There are those, perhaps a little pessimistic, who arrive at the high figures mentioned. The site Digiconomist, created by the Dutchman Alex de Vries, is the most serious representative of this camp which expresses a concern and finally distrust vis-à-vis cryptocurrencies, whose ecological footprint seems ...