In a story Saturday I mentioned claims about global energy usage for bitcoin “mining” – using computers to churn through complicated math computations to create new bitcoin. I used the parallel that it requires more energy than all of Ireland, one of several “more than X country” parallels I encountered.
But is that really true? It’s hard to know for sure in a distributed system like bitcoin, but there’s a good argument to be made that so much recent mining is done with ultra-efficient systems that the claims are wildly exaggerated.
Here is one of those arguments, which includes an excellent description of mining and economics of mining:
Bitcoin currently consumes mostly very cheap electricity. Miners race to the bottom of who can find the cheapest electricity, and everyone consuming electricity significantly larger than the average is forced to shut down their unprofitable operations.
As a result, Bitcoin mostly consumes electricity in places where it is abundant, cannot be stored or transported. Because oil, gas and coal are often trivial to transport, you very rarely find Bitcoin mining operations that consume these resources, because it would be more profitable to ship the energy to a place where it can be sold for more.
While some coal in landlocked and inaccessible locations is fired up in an environmentally unfriendly process to mine Bitcoins, most miners are powered by hydrogen dams, geysers and other geothermal energy sources that cannot be transported or stored.
Bitcoin will continue to seek those cheap and otherwise unused forms of electricity, while it will probably never be profitable to mine in urban or industrial centers. You are willing to pay more for your air-conditioning or water heating than a Bitcoin miner can afford.