Energy Consumption and Crypto-mining
The concern for the energy consumption of cryptocurrency mining has led some analysts to paint a dark picture of mining for the environment associated with this activity. However, several studies have shown that the electric power consumption of cryptocurrency mining is insignificant compared to other human activities.
Estimates made by the Center for Global Development last year, reveal that the American tradition of decorating homes with Christmas lights implies an electricity consumption higher than that of developing countries such as Laos or Nepal. However, this activity is not subject to review by legislators in charge of energy consumption in the United States, as is Bitcoin mining.
In August, a hearing was held at the United States Senate Committee on Energy and Natural Resources to address senator concerns about the energy consumption of cryptocurrency mining. The chairman of the committee, Lisa Murkowski, expressed concern about the impact of the high energy consumption of mining farms on the physical integrity of the electricity grid.
Global expenditure of Crypto-Mining
Experts who participated in the audience as mentioned earlier, as is the case of Thomas A. Golden, manager of the Electric Energy Research Institute, explained to the senators that consumption of cryptocurrency mining “represents less than 0.1 percent of energy use. Global”. The estimate is based on the global consumption of cryptocurrency mining of 5 Gw per day.
In contrast, Christmas lights hanging on American trees, roofs and gardens consume electricity in the order of 4.48 billion kilowatt-hours per year, according to the report’s calculations. The figure exceeds the national electricity consumption of many developing countries. The information shows an annual expenditure for Laos of 4.24 billion kilowatt-hours, while Nepal consumes 3.94 billion and Senegal 3.01 billion.
According to Digiconomist statistics, the annual global expenditure for Bitcoin mining can be estimated at very stable rates in 2018. Based on the estimates of the Christmas lights mentioned above, the electrical cost of this tradition is a lot more than the former. Now, if you compare the electricity consumption by Christmas lights with the consumption associated with mining Bitcoin in a month.
According to the Digiconomist estimate, both figures are very close, only counting the United States. On a global scale, however, Bitcoin’s energy consumption during the festivities is below consumption due to Christmas lights.
The comparison becomes more eloquent when we evaluate the usefulness of each activity. The mining of Bitcoin and other cryptocurrencies supports the security of a cross-border payment network, peer to peer, resistant to censorship. While the luminous decorations for Christmas, they do not go beyond stimulating the festive spirit of the people.
Other activities, such as banking services or gold mining, which could be compared with bitcoin in terms of utility, generate a much higher energy expenditure than cryptocurrency mining. According to a study, the electricity consumption of the entire banking system exceeds its limit every year, while precious metal mining consumes 20 times more energy than Bitcoin mining.
There are many contradictory figures and studies on the electricity consumption of cryptocurrency mining. However, although the crypto-industry certainly involves a significant energy expenditure, the apocalyptic scenario described by some does not seem feasible. Of course, it is necessary to take into account factors such as the increase in the use of renewable energies and the increasing efficiency of the crypto-mining equipment.