Mining bitcoin could cost us the earth
The stories around Bitcoin keep coming. Not just that there is a bubble around the price of it, instead how there are environmental impacts around the energy required to “mine” the coins and keep the currency in circulation.I’ve read a number of articles recently trying to quantify the power consumption needed by servers used to mine and verify the blockchain that bitcoin sits on.
When the currency was first produced, the number of coins and the size of the blockchain was much smaller, meaning you could mine the currency using a desktop PC, by essentially decrypting the blockchain every 10 minutes. As the number of tokens is now estimated to be over 16 million, out of a possible 21 million, more powerful computers are needed – requiring more energy in terms of power and cooling to keep the servers running.
PWC estimates the energy requirements to mine Bitcoin have increased 30% in the past month. As Bitcoin is limited to 1MB “blocks” on the blockchain, it is becoming a very inefficient currency in terms of the energy requirements to keep it in circulation.
Other estimates show the energy required for Bitcoin on a global scale is the equivalent of 3 million homes!
As the currency produces more coins, and more people connect to the blockchain to mine and transact Bitcoin, the processing power will just increase as the whole system gets noisier and noisier.
I’m not sure the supposed inventor of Bitcoin, Satoshi Nakamoto ever considered the energy requirements when he developed the technology. According to a Bitcoin expert I met at an event last week, Nakamoto holds 1M bitcoins that have never been claimed, meaning the “pool” of available coins is well below the 21 million maximum.
Just as SMS was never designed to be a mass-market communication tool, we need to be careful when we design for the future that the technology architecture can grow over time as new uses are defined.
Are you up to speed with Bitcoin and Blockchain? What is your stategy?