Is bitcoin an environmental monster? The energy consumption for production and entertainment however is enormous…
Bitcoin is getting more and more expensive. Recently, it noted with $ 7900 at a new ATH.
In the past ten days, a plus of 23 % is recorded!
The great interest in the digital currency also leads to the fact that previously overlooked aspects come into the spotlight.
For example, the cryptocurrency-focused internet platform Digiconomist calculates how much power the Bitcoin network consumes - and that's not all.
As it is mentioned, the currency is created digitally - mostly in gigantic mining farms (Proof of Work). In addition, the transactions are written to a file called the blockchain.
That's about 300,000 transactions per day. For their reward, the miner receive bitcoins.
As much electricity as Ireland
Running these computers consumes electricity, a lot of electricity. They generate bitcoin without break and that's why most of the data centers are located in China because each transaction requires around 245 kWh. That's about 3285 hours of television. That's 70.5 million kW hours a day 25.76 TWh a year. According to the average German electricity price, a Bitcoin transaction would cost more than € 70, in China it is only about € 23.
That is more than the country Nigeria consumes with 185 million inhabitants a year and about 0.12% of the global electricity consumption. And whoever argues that the power supply in Nigeria is underdeveloped: It is approximately the power consumption of Ireland.
Environmental consequences are controversial
The more transactions are made, the higher the power consumption. But it becomes difficult with the question whether Bitcoin is an environmental polluter - this depends on the current usage. There are data centers that are run with hydropower or geothermal energy.
However, since most server farms are located in China, we should assume that many data centers are running on coal. But you have to relativize the amount of electricity consumption: Even bills and coins are energy-intensive in the production. And even computer centers of the banks are not running with air and love. Everything that is managed digitally needs power.
The environmental consequences have been arguing for more than four years after author Mark Gimein published an article about it.
Insights into the high energy consumption of mining bitcoins is nothing new.
Already in mid-2015, a journalist had calculated that a single bitcoin transaction consumed as much energy as 1.7 US households a day. By the way, today there are already 8.3 households.
The Dutch scientist Sebastian Deetman had calculated scenarios for the energy consumption of bitcoins in spring 2016. The results for 2020 were between the output of a small power plant and the consumption of Denmark. Denmark currently consumes 33.3 TWh, 30% more than bitcoins.
So there is another solution to save unnecessary wasted energy…
Proof of Stake! The advantages of Proof of Stake are clear and there are several coins running on this algorithm. Key advantage is that Proof of Stake is a lot more energy efficient than Proof of Work as it can reduce the level of complex calculations and goes work involved that is inherent to it.
Proof of Stake only means people holding the currency earning it by verifying that they own. One famous Proof of Stake coin is Dash with its disadvantage of a quorum of 1000 Dash. You need to hold this amount be a Masternode before realizing any reward.
The alternative solution to Dash is Cloak which does not need more than one Cloak in order to get any staking rewards. The current team has really risen up from ashes and gave to the community a deep and clear understanding to aspect of privacy and anonymity. Cloakcoin provides earning interest of 6% per year by holding the currency.
Proof of Stake is important for the future considering the rise of mass energy consumption. It is a more reliable and ecological algorithm than the Bitcoin system. From the financial point of view, provides Proof of Stake also an advantage because no financial institution is rewarding any customer with a interest of 6% per year.
I hope with my article you will have a clear and deep understanding about the importance of Proof of Stake…