Philadelphia, PA - Bitcoin, Ethereum, and the whole cohort of cryptocurrencies have garnered much attention for their potential to help investors strike it rich with their price upswings. Leading cryptocurrency exchange platforms like Binance continue to witness plenty of interest from investors worldwide, despite the difficulties and comedown experienced last year and the FUD generated about its mining energy consumption.
There’s a lot of mystery and complexity surrounding digital assets, and it may seem like the more you learn about them, the more complex the concept is. One aspect that investors, especially those unfamiliar with cryptocurrency, keep wrapping their heads around is how much the process of generating Bitcoin impacts the environment. Numerous comparisons are made between this asset’s computing power and different industries, but they don’t all hold. Whether we talk about podcasts or blogs, a wealth of information doesn’t necessarily translate to data accuracy. It may have the opposite effect, muddying the waters for those with insufficient or fragile knowledge. This is why it’s imperative only to use reliable and trustworthy resources that provide relevant data to make healthy and truth-backed investment decisions.
Bitcoin’s electricity usage has been and will continue to be a hotly debated topic as environmental concerns rise and the asset receives more attention. Media coverage often focuses on Bitcoin’s price performance or regulatory landscape, overlooking essential factors such as the mark left on the planet. Furthermore, there are many sources of FUD, short for fear, uncertainty, and doubt, and energy consumption is no stranger to them. Many people get Bitcoin mining wrong, so let’s delve deeper into this topic to immunize against incorrect or false information that may influence investment decisions.
The Banking Sector’s Computational Power Used Doubles That Related To Bitcoin
When finding the biggest culprits behind the massive electricity consumption that financial services are responsible for, understanding how different industries work is a great starting point. Studies and surveys exist to help people through their journey and discover who bears the most guilt. Bitcoin is found to use up approximately 113.89 terawatt hours (TWh) per year to produce a fresh coin. To help you get a clearer idea, the average household in the United States accounts for a monthly 900 kWh. It’s significantly less compared to the traditional banking or gold industry, which is accountable for almost double the figure.
According to data provided by the same study, the banking sector stands at around 263.72 TWh per year. Setting up and managing bank headquarters, for instance, comes with a high environmental price tag since they’re excessively consuming and polluting endeavors. The number of accounts and cardholders will only increase as access to financial services is facilitated. Digitalization has assisted the banking sector in managing and storing data, but this also led to a surge in the amount of information banks must work with, translating to more energy being used.
On the other hand, the gold industry receives a lot of criticism for its dependency on electricity and the environmental threat posed. Even though BTC is a common alternative to the highly-coveted material, its environmental impact is far more insignificant. A Cambridge Bitcoin Electricity Consumption Index (CBECI) survey shows that the gold industry uses up around 131 TWh of electricity per year, showcasing a 10% increase compared to Bitcoin. However, experts may deny these numbers stating they might be exaggerated and providing good explanations to support their theory. The average ASIC miner can work appropriately for 5 to 7 years after being utilized, and when the right management conditions are met, its lifespan may extend to 10 years. Besides scoring well in terms of longevity, the rise in electricity costs means mining is also losing ground as a profitable revenue venture. As such, Bitcoin mining might stand at a lower point and gold be more consuming than the survey discovered.
Various Factors May Make Bitcoin Mining Puzzling
Understanding the process behind the creation of Bitcoins might perplex a newcomer to cryptocurrency who lacks a solid basis in cryptology and computer science. The challenging nature of grasping the process of generating fresh coins can be attributed to various factors. Most cryptocurrency users don’t live near mining farms, and the geographical distance can make it more challenging to understand the direct correlation between the environment and ASIC hardware.
Furthermore, the headlines in the media mainly cover financial and price analysis, market trends and sentiment, the potential for ROI, how blockchain facilitates job creation, and other seemingly more important topics. Rarely can you come across news discussing the impact of Bitcoin or that of other minable cryptocurrencies on the planet unless some changes are bound to occur.
Last, mining isn’t exclusively about plugging wires and putting expensive computers to work. More is happening behind the scenes as the overall upfront cost of producing new coins must also involve transportation, mining hardware development, facility setup, computer management, and endless other components.
Often, Bitcoin mining has pointed the finger at contributing to the total carbon emissions in the atmosphere and the pollution in water, noise, and air. While it’s true that it consumes problematically high amounts of energy, it’s essential to look at how other industries are also managing energy usage.
What Does The Future Hold For Mining?
One of the most important aspects is how Bitcoin mining is approached and worked on. Investors are looking forward to the moment Bitcoin sees its mining reward cut in half – a process known as “halving.” Experts foresee a potential 15% to 30% drop in Bitcoin’s mining hash rate by the end of the event, reducing the power needed to conduct transactions and perform other blockchain-related activities.
The latest equipment to generate Bitcoin already consumes less power than energy-greedy, old ones, making it more efficient and helping minimize the overall operational cost. But the following year's event is welcome in the crypto real as it will help remove some stigma surrounding Bitcoin and other digital coins that use proof-of-work systems.
While the chances of moving Bitcoin to a Proof-of-Stake system are close to zero due to its protocol, other endeavors will bring some comfort. It’s only a matter of time until new developments emerge.
