Impacts Of Electricity Cost Upon Bitcoin Mining!

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Analysts and reports are constantly making people aware of the energy-guzzling attributes of bitcoin mining. Websites like Quantam AI Trading offer remarkable features like precise trading calls, free demo accounts, and live customer support. Undeniably miners have made a lot of money in the past few years, but with changes in electricity cost, the value of bitcoin drastically varies. These reasons make bitcoin volatile and fragile. 

Bitcoin mining’s overall expense seems to have a significantly less impact on the actual spot value of bitcoin. The mere factor establishing good profitability in this business is cheaper electricity or less expense of any energy source. It will help a miner mine the bitcoin more efficiently and in less time. Let’s see how energy cost is having an impact on bitcoin mining. 

Bitcoin energy consumption during m...
Bitcoin energy consumption during mining ₿: Latest Tech News

Also, Read | Why Does El Salvador Believe That Bitcoin Will Be Successful?

Bitcoin Mining Statistics!

Impacts Of Electricity Cost Upon Bitcoin Mining!
Impacts Of Electricity Cost Upon Bitcoin Mining!

The report analyzes the nexus between electricity cost and bitcoin value over time. The 29th of Nov. 2017 marked the day when Bitcoin Cash hard fork occurred. As a result, the exchange rate of BTC almost doubled to $7,200 then. It was good news for Bitcoin miners, who had been on a losing streak in the past few months due to the price drop and shifted toward other cryptocurrencies like Ethereum and Litecoin.

According to electro wave reports, US miners are suffering due to Ethereum mining becoming more profitable than bitcoin mining. The statistics showed an asymptotic increase from 0.46TWh in 2013 to 1.05TWh in 2014 and 8.11TWh in 2015. The shocking numbers indicate miners’ greediness and the hurry to mine more bitcoins by using more electric energy and producing more heat & noise pollution without giving any heed to their future impact on our environment.

Bitcoin’s Electricity Consumption!

Impacts Of Electricity Cost Upon Bitcoin Mining!

First, mining consumes a lot of power because of the computational requirements it brings. As explained above, a single bitcoin transaction requires processing power equivalent to about 440KWh. It results in high energy costs per Bitcoin transaction and significant environmental damage due to extensive scale use of power by miners.

However, this is not the actual unruly aspect of bitcoin mining. The real problem is that miners operate on a business model that can only survive when bitcoin prices grow exponentially. Therefore, it is bound to collapse as soon as the exponential growth stops.

There is another issue with Bitcoin’s money supply algorithm. It lets anyone generate new Bitcoins using computer hardware to solve complex math problems (which requires a lot of energy).

Unfortunately, no one can solve this problem efficiently other than brute-forcing through trial and error. Moreover, as more miners join the network, the difficulty of these problems increases exponentially, which significantly raises energy costs and reduces incentives for miners to participate in this inefficient process.

Impacts Of Electricity Upon Bitcoin Mining!

Impacts Of Electricity Cost Upon Bitcoin Mining!

The current economic model of bitcoin requires continuous exponential growth for the currency to be valuable. It creates an inherent instability in the ecosystem because no one can sustain it for long. The global energy consumption needed for bitcoin mining exceeded 159 countries (Oct 2017). In fact, at its current growth rate, global energy consumption by the bitcoin network is predicted to surpass that of the entire world within just two years.

By employing miners, bitcoin has introduced a new kind of centralization in transaction processing. As we saw earlier, miners are responsible for securing transactions by putting their hashing power at the disposal of the network. 

A fundamental trade-off is a more significant number of miners can lead to greater decentralization, but it also makes the system more susceptible to collusion and manipulation by vested interests. Since then, people have been researching these issues and decided that Bitcoin will eventually become very difficult to mine once another digital currency resolves such problems by introducing new technologies and consensus mechanisms. 

Currently, the mining difficulty is 22 million, and they are already saying they can bring these numbers down by 5 million in just 80 days alone. 

To see a long-term lot for Bitcoin, a few innovations can play a crucial role, including a new consensus mechanism like proof of stake that may reduce energy consumption and make mining more affordable. Various projects are already working on developing such functionalities.

Vansh Sharma
Vansh Sharma
Graduate in Journalism and Mass Media. For me, writing is a free flow of thoughts and opinions that brings reality in a formative way. I am a keen observer of society and nature, hence my writing shares a dramatic arch with deep rationale. Writing and reading make me think deeper and help me draw a contrast to understand better. I have written research papers and am on the verge to complete more. You can walk with me from Cinema, lifestyle & everyday speculations to technology, health, and education.

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