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Energy use – Cryptocurrency against precious metals

We've talked about it a lot lately extraction of precious metals and the world of cryptocurrencies. The two may seem often unconnected, but today we are changing the switch and examining the sectors side by side through the goal of energy consumption.

New research published in the magazine Sustainability of nature this week he discovers that "mining" of cryptocurrency is significantly more energivorous than the extraction of physical gold, silver and other natural resources.

Researchers from Cincinnati, Max J. Krause from Oak Ridge Institute for Science and Education and Thabet Tolaymat, environmental engineer at the EPA spent two and a half years measuring the energy costs involved in the production of Bitcoin, Ehtereum, Litecoin and Monero. Their research shows that consumption has reached an estimated average of 17, 7, 7 and 14 megajoules (MJ) to "extract" the $ 1US value of each cryptocurrency, respectively.

These numbers are in sharp contrast to the levels associated with the extraction of copper, gold, platinum and rare earth oxides.

In the same study, the researchers found that the consumption rates of these resources were on average about 4, 5, 7 and 9 MJ respectively to produce the same value of $ 1US.

Aluminum was the only resource studied that did not work better than cryptocurrencies, requiring 122 MJ of energy to produce the same value of $ 1US.

What is Blockchain?

The whole premise of the cryptocurrency is based on the technology known as "blockchain". The blockchain is a public ledger designed to record and accurately check cryptocurrency transactions around the world continuously.

What makes the cryptocurrency blockchain unique is that it was created by competing "miners" to be the first to authenticate all transactions that take place in a precise 10 minute time frame. Each session consists of about 1 million transactions, second some measuresand has only one "winner".

The prize for this winner? Huge payments in cryptographic coins. How huge is it? At the start of 2018, Bitcoin's reward, for example, amounted to over US $ 100,000. It's really huge for 10 minutes of work!

So, how does one participate in the Blockchain Mining competition?

Miners engage in verification by coding formulas that control each transaction against the authentication benchmarks declared by the network. Reference parameters include rules such as a sender who actually owns the number of coins he is sending to the recipient.

Once someone says they have checked all the transactions at their fingertips, all other miners on the network must agree that they did it correctly, which means that each transaction meets all the network benchmarks.

It is not an easy task to correctly code the winning formula. Bitcoin, for example, makes their protocol quite complicated and regularly adjusts their requirements to ensure that there is actually only one winner per session.

A verified and approved transaction set constitutes a "block" and a new block is added to the existing "chain" of a network after each 10-minute round, thus creating the "blockchain" of the same name.

Since miners do not know what's happening in every round of the winning code, they do tons of tests per second to find the answer. The more runways have been run, the greater the chances of a miner becoming the winner of this round.

How many attempts is attempting every crypto-miner?

It depends on the amount of computing power of a miner. More computing power – or "hashrate" – more attempts – or "hash" – a miner can do. To put it in context, the hash rate is typically measured in Gigahash or in one billion code tests per second.

These efforts require a tonne computing power, which in turn needs a tonne of energy. But they are not necessarily the individual levels of energy used by each miner who is raising his eyebrows. It is the collective footprint of the entire industry that is alarming throughout the world.

Second Digiconomist, creator of Bitcoin energy consumption index, Bitcoin collectively places 39th in the use of energy from countries around the world, landing between Austria and the Philippines.

And this is only one cryptocurrency network!

Many cryptocurrency mining efforts have turned into large operations and even at the corporate level to remain competitive. These clothes use huge computer "warehouses" made up of numerous energy-hungry hardware devices that work 24-7. Or in some cases, stifling the hardware networks of non-affiliated companies.

These vast operations are not cheap, so many miners have searched for cheap electricity in countries like China, where many power plants are still in short supply.

Some in the industry have argued that such a radical use of coal energy has a negative impact on global CO2 levels. The Guardian predicts that Bitcoin's CO2 emissions are on track to reach combined emissions levels from one million transatlantic flights. Furthermore, the research was published in the journal Nature Climate Change last month suggests that "the expected use of Bitcoin, if it were to follow the rate of adoption of other widely adopted technologies, could alone produce enough CO2 emissions to push the heating above 2 ° C within less than three decades ".

This is the temperature increase of 1.5 ° -2 ° C which has scientists of the world deeply worried.

However, there may be some signs of a trend reversal. According to a recent PRI article, David Malone of the Hamilton Institute of Irish Maynooth University, who was one of the first to publish an analysis of Bitcoin's energy footprint, notes that some currencies are studying alternative mining methods that can mitigate energy consumption.

Bitcoin, the largest of the cryptographic networks, however, is not.

"For Bitcoin, I think the situation is actually a bit sad," Malone noted. "I think the only thing that will reduce the energy use of the bitcoin itself in the near future will probably be a crash in the value of bitcoins or something."

PRI He continues to note that Krause and Tolaymat, the authors behind this week's report, offer some positive thoughts. They point out that since encryption can be performed anywhere in the world, operations have the opportunity to open stores in countries powered by renewable energy.

While such moves "could significantly reduce their carbon footprint", harsh assertions such as precious metals will continue to remain likely to be the most incisive consideration of ongoing cryptocurrency activities.

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