“Mining” one dollar worth of bitcoin consumes more than twice the energy required to mine the same value of copper, gold or platinum, a study reveals. The study findings were published in the journal Nature Sustainability. Pointedly, the virtual work underpinning Ethereum, bitcoin and similar projects is similar to actual mining than otherwise perceived.
For clarity, “mining” is the process of verifying blockchains transactions underpinning cryptocurrencies. Since the blockchain technology behind cryptocurrencies is decentralised, “miners” have to confirm transactions within the blockchain. Notably, in the case of bitcoin, miners compete to expend electricity by performing pointless arithmetic quintillions on a block. The winner receives a bitcoin reward and the right to verify all the transactions of the block. The method is called proof of work protocol.
The researchers estimate that from 1 January 2016 to 30 June 2018, mining Bitcoin, Monero, Ethereum, Litecoin and Monero consumed an average of 17, 14, 7, 7 MJ to generate one US$, respectively. Comparatively, mining of aluminium, copper, gold, platinum and rare earth oxides consumed 122, 4, 5, 7 and 9 MJ to generate one US$. According to the researchers,
“..crypto mining consumed more energy than mineral mining to produce an equivalent market value.”
Despite the high cost of energy consumed in mining cryptocurrencies, aluminium gobbles 122MJ for one dollar’s worth of ore. Surprisingly, privately focused Moreno consumes 14MJ for one dollar worth of the crypto, almost catching up with bitcoin.
Previous Study Approaches
Earlier efforts to ascertain the amount of electricity guzzled to power bitcoin have only focused on the aggregate size of the network. Notably, one estimate approximated bitcoin’s network consumption to equate to the nation of Ireland. Another estimate noted that the network energy consumption equalled the annual carbon emissions from one million trans-Atlantic flights.
Interestingly, the new research provides a new angle of viewing mining efforts. Its focus on energy cost per dollar benefit is providing a new impetus to the study. The researchers affirm that:
“The comparison is made to quantify and contextualise the decentralised energy demand that the mining of these cryptocurrencies requires,”
The researchers’ further state that:
“and to encourage debate on whether these energy demands are both sustainable and appropriate given the product that results from relatively similar energy consumption (when normalised by market price).”
The researchers used a median value of all cryptocurrency prices in the study for the period under review. Moreover, the researchers tried to take into account the geographical spread of all crypto miners.
A Shift from Proof of works
With the increase in energy consumption, there is a developing shift into another untested protocol called proof of stake. The Ethereum project has declared its interest in using the protocol as a means of verifying transactions. Therefore, in future, the adoption of new technologies will play a vital role in measuring the environmental impact of cryptocurrencies.