The price hasn’t been the only thing surging with Bitcoin recently and with eyes focused on the up trending chart many are unaware of what actually goes into producing one. A global surge in energy consumption has been an unfortunate side effect of Bitcoin’s soaring demand. According to reports energy consumption for Bitcoin mining has increased by around 30% in the last month alone.
A study by the Digiconomist claims that the current estimated annual electricity consumption for Bitcoin is over 30 TeraWatt hours. This is a lot of energy and equates to 1,000,000,000,000 watts per hour or roughly 0.14% of the total global electricity consumption. The Bitcoin Consumption Index states that current mining operations use more energy than 159 countries including Nigeria and Ireland. It went on to claim that almost 2.8 million US households could be powered by Bitcoin and almost 10 can be powered per day from the energy used in a single Bitcoin transaction. The continual power consumption is 3.4 Gigawatts which is more than five times that produced by Europe’s largest wind farm and almost three times that needed to send a DeLorean back to the future!
A computational conflict is going on between miners who are racing to crunch the numbers for the next block reward, calculations which get exponentially more complex every time. The mining process which verifies each transaction and adds the information to the public leger is an extremely power hungry one. It cannot be done on an individual computer but is carried out in mega-factories, the majority of which are in China. Banks of computers and graphics cards fill these warehouses constantly churning away and drawing off the power grid. Companies rent time on them out to individuals who get a slice of the mining action every time a new block is completed and added to the chain.
If these miners were their own country they would rank 61st in the world for electricity consumption. To compare with Visa, which carries out around 200 million transactions a day when the Bitcoin network handles less than 350,000, its US data centers consume only 2% of the power demanded by BTC.
With a tenfold price increase in less than a year and an unsustainable lust for power many analysts predict that the bubble will burst. At the moment though this doesn’t look like happening as Bitcoin marches upwards into five figures and is not showing any clear signs of slowing down.