A lot has been said about bitcoin mining and how it is a power hungry process. Bitcoin mining is an inefficient process, that wastes limitless resources. But bitcoin mining, compared with other worldwide extraction activities is very efficient. A new report has found that bitcoin mining spends less energy than gold mining (and by a great margin).
Bitcoin Mining Energy Expenditure Overestimated
According to the latest report from Longhash, mining is not so inefficient as they want it to show it. Longhash made a series of calculations that assure that bitcoin mining is no the energy hog that they want to show. But it turns out that bitcoin mining consumes less than 5% of the amount of energy that the whole gold extraction in the world.
The article takes a series of estimation to get to these numbers that seem strange, but have their support in real mining estimates and energy consumption number taken from real reports. The article uses two methods to estimate bitcoin mining prices: top down and bottom up. Through this focus, they managed to find the price of mining: $4.3 billion yearly.
As opposite, gold mining numbers go by the costs of reports. Reports issued by the largest gold mining company in the world: The Barrick company. The energy expenditure of gold mining is also considerable. Through a long and detailed study, they calculate that more than 87,3 billion dollars to mine gold annually. This is really astounding.
Direct Energy Costs And Benefits
But the costs and energy expenditure are not just enough to calculate efficiency. Cryptocurrency mining depends mostly on hydroelectrical or renewable energy. This because most of the miners locate themselves in areas where the energy is cheap and there is plenty of availability. In contrast, mining is an activity that only can be done in certain places. Most of the energy used in mining comes from petroleum derivates like diesel and other fuel sources.
So, the energy for bitcoin mining is cheaper and also renewable, while the energy to mine gold is mostly dirty energy, that comes from the use of coal and oil. However, these are just estimates. The cryptocurrency mining industry is pretty tight-lipped. No one would like to announce their mining setup, or where anyone is running a bitcoin or cryptocurrency farm. To do so would put mining assets in danger in various countries all around the world, like Venezuela, where miners hide.