Cheap power is driving the expansion of the cryptocurrency and other digital asset universe and, as the industry grows, more and more is gobbled up. Unfortunately, not all that energy comes from clean sources creating an ever-growing carbon footprint.
The reason is the computing power needed to verify transactions, and cooling systems to keep constantly running computers from melting, to add them to the blockchain in the decentralized network. However, there are calls to change the way that transactions are verified which could greatly reduce the staggering amount of energy needed.
Energy-guzzling supercomputers mining cryptocurrency
A typical supercomputer consumes vast amounts of energy to process the data that is pumped through it, which is then converted into heat requiring cooling adding to the energy needs. Cryptocurrency miners use computers that are specifically built for mining called Application-Specific Integrated Circuit devices (ASCI). Differing models are better for mining different coins as each cryptocurrency uses its own algorithm.
According to Software Testing Help the best ASIC for Bitcoin is the Antminer S19 Pro. Mining operations will combine a number of ASCI to form what are called rigs. Each the Antminer S19 Pro has a hash rate of 110 TH/s and consumes 3250 Watts per hour. The machines need to be run 24 hours a day meaning a sizeable amount of energy to extract new Bitcoin.
The Bitcoin Energy Consumption Index provided by Digiconomist estimates as of April 2022 a single Bitcoin transaction takes almost 2,189 kWh to complete, or the equivalent of just over 75 days of power for the average US household.
Not all cryptocurrencies use excessive amounts of energy
There are two main competing ways of verifying transactions “proof of work” and “proof of stake” the former being the one Bitcoin, the original cryptocurrency, uses along with several others. Proof of work has miners competing against each other to be first past the post meaning that all the miners are using all their computing power to process the same information.
The reward is that winner takes all, which is currently 6.25 Bitcoin for adding a new block to the blockchain. The price per coin, like all cryptocurrencies, fluctuates constantly with Bitcoin hitting a peak of over $64,000 in November but is nowadays moving around $39,000.
The current carbon footprint from mining Bitcoin alone is massive and growing. According an online calculator that tracks energy consumption created by the University of Cambridge, Bitcoin mining uses as much electricity as Sweden. A campaign called Change the Code Not the Climate cites a report in the journal Nature Climate Change that if it doesn’t change how it verifies its blockchain that Bitcoin alone could raise global temperature by 2 degrees Celsius if it became widely adopted.
Change the Code Not the Climate wants Bitcoin, as well as all other digital currencies, to switch to proof of stake which Ethereum 2, the original ETH1 uses proof of work, is in the process of doing. This system shares the work and the benefits of adding blocks to the block chain. Miners place a share of their “coins” into a pool and when the latest batch of transactions is added to the blockchain the reward is spread out, but so too is the work of solving the puzzle.
Miners can also hedge their bets participating in various pools, with each reward being split proportionally among the participants based on who had a bigger stake and time invested in processing the transaction. By adopting this form of coding, the campaigners say it will reduce the amount of energy used for transactions by 99.9 percent.