Bitcoin Mining – Video 5

Hello and welcome, this is video 5 for the module on Bitcoin Mining Although Bitcoin is still the most popular cryptocurrency in the world, it’s not without its issues

One of the major problems that’s plaguing the Bitcoin mining system is the high amount of energy it requires to run As we’ve seen in this module, people and companies are spending enormous amounts of money on their Bitcoin mining farms When you break it down, every transaction over the Bitcoin network consumes electricity, so collectively, this network takes a lot of energy to operate A recent study estimates that the entire network is consuming at least 26 gigawatts of power each year

Just for reference this is nearly the amount of power that the country of Ireland consumes in a year That’s a lot of power for a digital currency that’s supposed to revolutionize our world financial markets! And it’s even worse than that… This 26 gigawatts number is assuming that all Bitcoin miners are using the most efficient hardware, which they’re not So, the upper limit of Bitcoin’s electricity consumption estimate is over 77 gigawatts

And here’s an interesting comparison for you: the credit card company VISA processes billions of transactions every year and only consumes an equivalent amount of power to 50,000 American homes over that same year This number pales in comparison to the amount of energy required to maintain the Bitcoin network In fact, it’s less than 2% of the energy that Bitcoin is using According to Digiconomist, the power required to process a single Bitcoin transaction can do one of the following: Power the two Tesla car batteries Power a refrigerator for a whole year

Boil 1872 tons of water Or Provide enough power to an average sized American home for all the activities they need for a week And that’s not for an entire block, that’s for just a single transaction… One of the main concerns about Bitcoin mining is that most of the mining is being done through coal-powered electricity

This obviously leads to a lot of carbon emissions across the world, which negatively impacts the environment Increased carbon emissions are associated with increasing the effect of pollution and climate change In 2018, global warming continues to be a major topic of debate As humans have a profound impact on the health of our planet, anything that we can do to reduce our environmental footprint should be considered However, in the past few years, Bitcoin’s growth has started to add a considerable amount of carbon emissions into the atmosphere and it’s still only in its infancy

Many environmentalists, in fact, believe that Bitcoin’s rise could even be delaying the world’s transition from fossil fuels to more sustainable energy sources In addition, Bitcoin’s network is even straining the existing energy infrastructure in certain countries If other cryptocurrencies were to emerge with a similar, energy intensive proof-of-work system then it could become a major siphon of energy around the world That said, newer cryptocurrencies are looking to come up with innovative ways to create more energy-efficient systems, so we’ll see what the future holds for the cryptocurrency world Still, Bitcoin’s energy usage is a major issue of concern for the system and has sparked significant debate about its efficacy and sustainability

This module has explored the world of bitcoin mining To recap, it is a global lottery that takes place every 10 minutes Bitcoin miners across the world compete to solve a cryptographic puzzle faster than anyone else Conveniently, they also process transactions while they are completing this puzzle Once a miner solves the puzzle, this is broadcast to all other nodes

That miner is rewarded with newly created bitcoins and transaction fees for their effort It was an entirely novel way of creating money and record keeping However, it doesn’t come without downsides, as we also discussed the high energy cost required for bitcoin mining to take place Still, this process was completely ingenious and groundbreaking It set the stage for hundreds of other cryptocurrencies that followed it, and simultaneously created the most secure, trustworthy financial network the world has ever known

Source: Youtube