Extracting a dollar’s worth of cryptocurrency requires up to three times more energy than digging up a dollar’s worth of gold, according to a new international study.
Decentralized cryptocurrencies have been hailed as revolutionary economic disruptors, powered by an unknown number of server farms manned by an unknown number of crypto ‘miner’ machines working around the clock to produce more blockchain-protected finance.
The environmental impact of such huge processing requirements has yet to be fully accounted for, however, global bitcoin mining has surpassed the energy consumption of entire nations in recent years.
“We now have an entirely new industry that is consuming more energy per year than many countries,” said Max Krause, a researcher at the Oak Ridge Institute for Science and Education and lead author of a new study in the journal Nature Sustainability. The top 100 cryptocurrencies in the world have a combined market value of roughly $200 billion (€175 billion).
According to the study, in 2015, Denmark consumed 31.4 billion kilowatt hours of electricity; but as of July 1, 2018, bitcoin mining worldwide had already consumed roughly 30.1 billion kilowatt hours in just six months. One 2017 estimate of the energy-consumption of bitcoin operations worldwide placed it as roughly equivalent to the consumption of the Republic of Ireland.
“We wanted to spread awareness about the potential environmental costs for mining cryptocurrencies,” Krause added. “Just because you are creating a digital product, that doesn’t mean it does not consume a large amount of energy to make it.”
Cryptocurrency mining can be performed by single devices, but is more often done in farms comprising hundreds if not thousands of machines, crunching numbers and performing immense calculations in search of digital treasure, a reward of about about $80,000 in bitcoin.
It’s a first-past-the-post system, with miners rewarded handsomely (or poorly, depending on the recent volatility in the cryptocurrency markets, an oft-covered phenomenon). The researchers used the median crypto value for the top five coins to account for all the volatility in the cryptocurrencies markets. The transactions are confirmed on the distributed global ledger known as the ‘blockchain’.