The debate about cryptocurrency and energy consumption

The debate about cryptocurrency and energy consumption

Energy consumption has become the latest flashpoint for cryptocurrency. Critics have dismissed it as an energy hog, while promoters have praised it for being less intensive than the current world economy. One such critic, Alex de Vries, founder of DG Economist, said he had “never seen anything as inefficient as bitcoin.”  On the other side of the debate, a study by ARK Investment Management found that the bitcoin ecosystem consumes less than 10% of the energy required for a conventional banking system.

While it is true that the banking system serves many more people, cryptocurrency is still mature and, like any other industry, the initial infrastructure stage is particularly intensive. The cryptocurrency mining industry, which earned about ৪ 1.4 billion in February 2021 alone, is still unusually frightening for the environment compared to other aspects of modern life in industrialized societies. De Vries even told TechCrunch that if environmentally conscious regulators took “all possible action against bitcoin, you wouldn’t be likely to run all governments” with control of mining.

“Ideally, the change comes from within,” de Vries said, adding that he expects bitcoin core developers to change the software to require less computational power. “I think Bitcoin consumes half the energy of all the data centers in the world right now.” According to the Bitcoin Power Consumption Index at the University of Cambridge, Bitcoin miners expected to receive about 130 watt-hours of power (TWH), which is about 0 percent of global electricity consumption 0.6%.

This has equated the carbon dioxide emissions of a small, developing nation like Sri Lanka or Jordan to the bitcoin economy. Jordan, in particular, is home to 10 million people. It is impossible to say how many people use Bitcoin each month and Amman residents use it less than Jordanian dinars. However, CoinMetrics data suggests that more than 1 million bitcoin addresses are active every day out of more than 106 million active accounts over the past decade, which lengthened by crypto.com. 

A representative for Crypto.com said, “By calculating the total number of addresses from the listed exchanges, we get the total population of unique Bitcoin (BTC) and Ether (ETH) users.” Many people use these financial networks. In addition, many bitcoin mining businesses rely on environmentally friendly energy sources such as natural gas leak capture from hydropower and oilfields. Compass Mining COO Thomas Heller, a mining industry expert, said Chinese hydroelectric mines in Sichuan and Yunnan get cheap electricity during wet season.

They continue to use hydropower throughout the year, he added, although it is less profitable during the annual dry season. “Outside of May to October [in the wet season] electricity prices are much more expensive,” Heller said. “However, some farms supply water to other parts of the year.”