The bitcoin extraction uses more energy than the physical one

According to a study published in the journal Sustainability of nature November 5, by researchers Max J. Krause and Thabet Tolaymat, it seems that the mineral cryptocurrencies – like bitcoin – use more energy than conventional copper and platinum mines. It could also use a lot of energy – possibly more – like the amount used to extract gold. For some in the technical and environmental fields, this is not new information. In fact, since the beginning of bitcoin, environmentalists and technology enthusiasts have drawn attention to the process of energy-intensive extraction of popular cryptocurrency.

Because of the new study, we now know, however, that the amount of energy required to extract bitcoins is almost twice that required for copper and platinum. But why is energy so expensive and what does this mean for the future and sustainability of the cryptocurrency movement?

What is causing energy consumption?

To better understand the results of the study, it is important to have a basic understanding of what bitcoin and other "cryptocurrency" miners are doing. Bitcoin is only a type of cryptocurrency, well known as the original currency with the highest market capitalization, but it is not the only currency in circulation. Along with many other coins and tokens, bitcoins are digital money that can be owned by anyone, transferred from one side to another, which are not issued by a central authority such as the US dollar or other fiat currency.

The underlying technology that powers bitcoins and many other cryptocurrencies (though not all) is blockchain technology. The Bitcoin network is based on a decentralized network with a distributed ledger to track all transactions. As people send and receive bitcoins, the network records the transactions. All registration is made by a large group of volunteers who maintain the network; these "volunteers" are the miners.

Those "minerals" for bitcoins are not physically extracting, but rather they solve difficult cryptographic enigmas showing that they have recorded the correct transactions and are in agreement with the network before adding a block (a piece of information, that is a set of transactions ) to the chronology of transactions in the past (ie the "chain") – that's how we find ourselves with a "blockchain". This is also the way new bitcoins are generated.

To accomplish this task, the Bitcoin network works using a consensus mechanism called "Proof-of-Work" (PoW). This requires miners to perform a great deal of processing and involve a lot of hardware running 24/7/365 in large quantities. If you've ever seen a cryptocurrency mining operation before, you'll know exactly what we mean.

Understanding the scale

The second factor to consider besides the real mechanics of what happens when mining is the size of operations. While there are miners who run small plants in their college dorms, there is an even greater number of exceptionally large mining operations taking place all over the world. Given the way in which the intensive extraction of energy for cryptocurrencies is, energy consumption is added only when considering the global scale of the mining sector.

In fact, some estimates have put the global energy consumption of bitcoin mining the highest energy consumed by all of Ireland. While others believe that these estimates are inflated, the fact remains that the mineral cryptocurrencies require a considerable amount of energy, especially after factoring in mining operations from other cryptocurrencies in addition to bitcoin, as the second highest currency by market capitalization, the 39; ether.

What is the community doing to solve this?

Obviously, those in the margins are not the only ones to notice the large amount of energy consumed by mineral cryptocurrencies. Improving efficiency in the cryptocurrency world is already a concern for many of the best minds in the industry.

The founder of the Ethereum project, Vitalik Buterin, has already proposed a new direction for the well-known blockchain-based platform that has given rise to so many new tokens in recent years. Although currently functioning on a Proof-of-Work (PoW) consensus mechanism such as Bitcoin, the Ethereum network is likely to finally transition to a new Proof-of-Stake (PoS) hybrid method that will reduce energy consumption in the encrypted mining sector while maintaining the integrity of the network. The new initiative has been dubbed "Casper" and must be implemented with sharding for a new version of Ethereum known as "Serenity", according to Buterin.

At the same time, there are other members of the community looking for different solutions. Some sources do not look at energy consumption per se, but rather at how miners are getting the energy they need. New initiatives are popping up in the market to offer green energy solutions directly to the mining community with a strong thirst for energy.

While others, like Timothy Lee with ArsTechnica, have pointed out that if the price of bitcoin remains (relatively) consistent, then it is likely that the demands of energy from the network will decrease over time, not increase, as block premiums (the amount of bitcoins miners receive) decrease over time. The next "halving" is expected in mid-2020, with the premium cut by about 50% every four years after the last of the 21,000,000 bitcoins has been completely extracted.

Others in the industry do not like the comparison between the extraction of gold and crypto altogether, as stated by CEO and co-founder of cryptopotato.com:

"I think this type of comparison is too superficial, it does not take into account two factors that are much more important than the amount of energy consumed: the Bitcoin mines will always try to reduce their energy price and consumption as much as they can try to find renewable energy resources in order to make processes cheaper and more efficient.

In the case of gold mining, however, electricity is just one of many resources in a process that has many constraints that lead to non-renewable resources such as coal and oil that have far-reaching environmental repercussions. ."

Going forward

Even with the significant consumption of energy by cryptocurrant miners, the researcher behind the study, Max Krause, still believes that cryptocurrencies will continue to grow in popularity and relevance in society, saying that:

"I think in the next five years you will have the opportunity to buy something on Amazon or coffee in your local store with cryptocurrency, but what I want is for people to understand all the costs of new technology, but we should have a good understanding of what we are exactly embracing ".

The question now remains about how energy consumption problems will impact the growth and direction of the cryptocurrency world in the near future. What do you think?