Bitcoin mining in the world already consumes more energy than countries like Argentina, the Netherlands and the United Arab Emirates, according to an analysis by researchers at Cambridge University, in England.
According to the report, cryptocurrency mining demands a lot of energy from computers, as extremely sophisticated calculations are required to verify and authorize all transactions that are carried out simultaneously. The estimate is that consumption was 121.36 terawatt-hours (TWh) per year.
The number is slightly higher than the energy consumed annually in Argentina, which is 121.00 TWh, while the UAE consumes 113.20 TWh, with much of this consumption coming from luxury hotels and shopping malls in Dubai, the country’s capital and consumption is also higher than all the energy used annually in the Netherlands, which is 108.80 TWh.
If energy consumption for cryptocurrency mining continues to grow, which is likely, the volume of energy used per year will also be greater than that of Norway, which is 122.20 TWh.
Mining companies are buying entire power plants
With the energy expenditure of cryptocurrency mining becoming an increasingly hot topic in debates about these digital assets, some miners are taking extreme action to try to alleviate this problem. In some parts of the United States, people are buying entire plants and installing their equipment inside them.
These cryptocurrency miners, mostly organized in companies, are looking for what they are calling “idle energy”. This unused energy usually comes from existing power plants, or abandoned facilities with access to inactive energy sources. These plants can be, for example, in deactivated plants.
An example of this is what was done by the cryptocurrency mining company Core Scientific, based in Washington, capital of the United States, moved to a former factory of the Levi’s jeans brand, which had exclusive access to a small hydroelectric station. Other companies, however, have opted to buy gas-fired power plants to power their operations.
Who opted for this was the Greenide Generation, located in the village of Dresden, in Yates County, in the state of New York. According to the company, this movement took place so that they could offset their carbon emissions. However, there is a debate over whether actions of this type are really effective in making cryptocurrency mining really sustainable.
Preferred properties for mining
Other mining operations have installed in abandoned warehouses, mills, airplane hangars, aluminum smelters and steel mills. The biggest need for these companies is a large, open space with ample ventilation and access to cheap sources of energy or a pre-existing infrastructure for installing large servers.
According to the CEO of cryptocurrency mining supply company Foundry, Mike Colyer, the “darlings” are the old metallurgists. According to him, this happens because they are very large buildings with electrical equipment installed and that were designed to dissipate heat and with an infrastructure that is practically ready to become mining farms.
Some states in the United States, such as New York, tried to block this type of operation because of concerns about environmental issues. Others, however, such as Texas, Kentucky and South Dakota, are welcoming these companies with open arms as they see it as an opportunity to reactivate previously abandoned land.
Energy consumption for mining is proportional to the increase in the value of the currency
We know that the damage caused by cryptocurrencies to the environment occurs because they require a large amount of energy to exist.
Bitcoin production is done by computers that perform highly complex mathematical calculations. These computers are connected to a kind of parallel network on the web.
All of this was developed in 2009 by an anonymous computer programmer. He established in his computerized codes that, every ten minutes, bitcoin software launches a different mathematical equation on the internet. The computer that unravels the formula first is rewarded with a lot of 6.25 bitcoins.
Since “miners” are paid in bitcoin, the higher the currency rate, the more likely someone is to invest in equipment that decodes the equations.
Another fact that big players, like Tesla, enter the bitcoin market makes the value of the currency also increase. To give you an idea, after the announcement that Elon Musk’s company had invested $1.5 billion, the value of the virtual currency soared and hit $48,000.
According to Michel Rauchs, a researcher at The Cambridge Center for Alternative Finance, the increase in values should cause the energy consumption for bitcoin mining to also increase. “This is not something that will change in the future, unless the price of Bitcoin drops significantly”, says the researcher.
