The cryptocurrency boom is in all its glory. This type of digital currency came in 2008 to stay, and in the simple process of existing, some of the most popular such as bitcoin use large amounts of electricity, even equivalent to that generated by an entire country in a whole year.
The process of creating bitcoin to spend or trade consumes about 91 terawatt hours of electricity per year, more than Finland, a nation of roughly 5.5 million people, uses. This large amount of electricity used is equivalent to 0.5% of all electricity consumed in the world, and all the electricity consumed by the state of Washington, in the United States.
Just to mine one bitcoin you need the electricity equivalent to nine years of consumption in an average American home, which translates to a cost of approximately $ 12,500 considering an average monthly bill of $ 115. The most worrying thing is that each year it continues to increase, and is currently ten times higher than it was five years ago.
Why does it consume so much electricity?
The reason cryptocurrencies consume so much energy is due to the mining process. Thousands of new bitcoins are created daily through a complex process known as “mining”. This takes place when computers connected to the Internet are processing complex mathematical equations through specialized software, the winner, or whoever does it the fastest, wins bitcoins. In other words, day and night and all over the world there are hundreds of thousands of machines working non-stop, which implies a very high consumption of electricity that has not stopped growing. And that may not stop for years to come.
As of today, a single Bitcoin is worth around $ 50,000, although every second the amount changes. Managing a digital currency of that value without a central authority requires a great deal of computing power.
Mining bitcoins is getting more and more complicated
Back in 2008 mining bitcoins was easier, less popular, and worth much less money. Anyone with a home computer could join the process. Now everything has changed, to mine bitcoins a user needs highly specialized machines, invest a lot of money, a large space and enough cooling power to prevent the hardware in constant operation from overheating. That is why it is normal for the mining process to occur in huge data centers or companies.
With mining becoming so popular, everyone in the process wants the newest and fastest machinery, leading to high turnover and a new e-waste problem. According to economists’ estimates, every year and a half or so, the computational power of mining hardware doubles, making older machines obsolete.
Countries where it is cheaper to mine bitcoins
Currently, bitcoin mining occurs all over the world. Especially in places where electricity is cheaper. An example of this is that more than 46% of bitcoin miners are in China, as it offers very cheap energy. However, at the end of 2019 the percentage was 75%, this is because recently, the Asian country has begun to take energetic measures since the popularity of bitcoin has made electricity networks unstable.
Meanwhile, the United States’ participation in mining grew to 16% from 4% during the same period. There are also significant mining figures in Russia, Iran, and Kazakhstan.
Venezuela is another of the countries where the electricity bill is quite cheap, therefore, the South American country has become one of the most profitable to mine bitcoins. In several buildings in the capital you can hear the deafening noise of mining machines. Many of them have rented apartments with around 80 teams working full time, each generating about $ 125 per month. The cost of the monthly electricity bill for such a mining site is about $ 10.
In Venezuela electricity service is subsidized and is practically a gift. For this reason, mining is “profitable”, since one of the fundamental variables is the cost of electrical energy.
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