Impact of mining on electricity consumption
From time to time in different media, you can stumble upon a statement about cryptocurrencies as a very energy-consuming asset. Allegedly, for their extraction (mining), they require so much electricity that soon the planet and some countries, in particular, will begin to feel acutely short of it to meet the usual needs of the economy and the population.
In May 2021, Elon Musk added fuel to the fire, stating that he was postponing accepting bitcoin for payment for his Tesla cars, allegedly due to environmental concerns. "We are concerned that more and more organic sources of energy, especially coal, are required to mine Bitcoin and support transactions, which is the worst fuel of all in terms of emissions," Musk said. Cryptocurrency is a good idea in many ways, and we believe in its future success, but it cannot cost the environment that much. " In July, he already softened a little and admitted that Tesla will soon start accepting bitcoins for payment for its electric vehicles again if at least half of the energy for mining cryptocurrency will be used from renewable sources.
Have cryptocurrencies really started to threaten the planet's energy balance and are as frighteningly energy-consuming as many say? Or are these fears unfounded? Let's try to understand this issue in this article.
Cambridge University Analytics
The University of Cambridge, or rather its Center for the Study of Alternative Finance, paid special attention to this topic. Scientists decided to compare the electricity costs of mining bitcoin with other industries, such as gold mining on the planet. They also decided to control the share of electricity consumption for bitcoin mining and even displayed a counter on the university website showing the exact index of such consumption. This counter is updated on a regular basis – every 24 hours.
According to it, Bitcoin mining accounts for only 0.48% of global electricity consumption. And if you look at all types of energy in general, and not only consider electricity, then its share is even less – only 0.08%.
Comparison of electricity costs for mining bitcoin and gold also speaks in favor of bitcoin. It turns out that gold mining requires significantly more electricity – 131 TWh per year versus about 95 TWh per year required for Bitcoin mining.
Comparison with other industries further shows that the energy consumption for bitcoin mining at the moment is simply scanty, especially against the background of electricity consumption by heavy industry sectors. For example, air conditioners all over the world consume 2199 TWh per year, the chemical industry – 1349 TWh per year, metallurgy for the production of iron and steel – 1233 TWh per year. The paper industry and cement production consume 586 and 384 TWh per year, respectively. Even such seemingly harmless entertainment as New Year's illumination, only in the USA burns electricity by 60 TWh per year. And this is without considering other countries, citizens who also do not skimp on buying New Year's garlands to decorate their homes during the Christmas and New Year holidays.
Two more indicators are striking in their scale of destructive energy losses. This is the amount of electricity lost during transportation and distribution between supply facilities in the United States, which is 206 TWh per year (2.2 times more than Bitcoin mining requires). And also, the extraction of gas from the bowels of the planet, the cost of electricity for which in the global potential can reach 688 TWh per year, which is 7.3 times more than is required for mining bitcoin.
Compared to electricity consumption by different countries, bitcoin consumes slightly more than Kazakhstan and the Philippines, but less than the Netherlands and the United Arab Emirates. As you can see, the threat of bitcoin to the energy system of the planet is greatly exaggerated. Elon Musk's guile
It is important to note that more and more renewable energy is being used to mine bitcoin every year. In 2021, up to 75% of electricity is already accounted for by "green" energy: wind, solar, water, and bioenergy. For this reason, most of the mining farms in China are trying to settle down near giant power plants. In the United States, near flares to burn excess gas or close to dams in places such as the Pacific Northwest and upstate New York. In Iceland – closer to hydrothermal installations. In Ukraine, it is planned to place the largest mining farm near one of the nuclear power plants in order to direct the surplus reserves for the extraction of cryptocurrencies.
Most sectors of the world economy cannot yet boast of such success and, as before, mainly use energy from non-renewable sources (gas, oil, coal, etc.). Including mechanical engineering. Therefore, Elon Musk's statement is nothing more than a manipulation of facts and slyness.
Tesla factories in 2020 produced about 510 thousand cars. With an average battery capacity of 75 KW per hour, Elon Musk burned 37.5 HW of electricity just for the first refueling of new cars shipped from the factory. It received 90% of this volume from distribution networks. 33 HW were sourced from non-renewable sources.
All-electric vehicles produced by Tesla, with an average mileage of 20 thousand km/year, consume 15 TWh of electricity per year, which corresponds to the annual consumption of Sri Lanka.
Moreover, more than 13% of this volume is made up of losses during the conversion of electricity from cable networks into stored electricity in a car battery. Due to imperfect battery charging technology, Tesla vehicles waste 1.95 TWh of electricity per year, which equates to Malta's annual consumption.
In terms of emitting CO2 into the atmosphere, the Tesla electric car, on average, emits more than the Toyota Prius, the diesel VW Golf and even more than the diesel Audi A7. The environmental performance of Elon Musk's electric vehicles is only marginally better than that of 40-year-old Volvo cars.
All sectors of the world economy use electricity, it is important that this process is as efficient and environmentally friendly as possible. Bitcoin is working hard to achieve both goals and can be considered the biggest lobbyist for green energy right now. No matter what Elon Musk tells about it.
Fobs Content Creator2021-09-10T12:46:38+00:00September 2nd, 2021|Categories: Cryptocurrency market|Tags: Cryptocurrency|0 Comments