If you’ve been on the internet in the past few years, you’ve probably come across buzzwords like “Bitcoin” and “cryptocurrency”. There have been many ads encouraging people to “join the movement” and “be part of the future”. But how much do we know about this form of digital currency and its consumption of energy resources around the world?
What is Bitcoin?
Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank and underpinned by a system called blockchain, which records transactions.
To make sure that transactions are not falsified or records of ownership changed, participants of the Bitcoin network have to sign off on transactions in “blocks’, hence blockchain. It was created in 2009 and basically anyone with enough electricity, internet and space to house computers that can “mine” Bitcoin.
People who verify these “blocks” are rewarded with fresh Bitcoin as an incentive for doing this type of work, which involves computers completing complex cryptographic problems. This is what they call “Bitcoin mining”.
What is cryptocurrency?
Cryptocurrency is a medium of exchange using cryptography (a process of process of converting legible information into an almost uncrackable code) to secure the transactions, to control the creation of additional units, and to verify the transfer of assets. It was born out of the need for secure communication in the Second World War and Bitcoin is the first cryptocurrency.
Bitcoin is now worth more than $10 000 (+- R135 556) as of November 2017 and soaring to record breaking levels but it’s not all positive.
Bitcoin uses more energy than 159 countries use in a year
Recent research by energy tariff comparison service PowerCompare.co.uk shows that the amount of energy used by computers mining bitcoin globally has already exceeded the amount used on average by 159 countries.
Using stats from Bitcoin and cryptocurrency data provider Digiconomist, PowerCompare.co.uk compared the amount of electricity used to mine Bitcoin to the amount used by different countries annually. They found that 29.05 TWh of electricity was used to mine bitcoin compared to an estimated 25 TWh of electricity per year used by Ireland. Here is a map that shows the countries that Bitcoin eclipsed in energy usage.
If Bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption. If it keeps increasing at this rate, Bitcoin mining would consume all the world’s electricity by February 2020.