Bitcoin’s skyrocketing value is also accompanied with soaring energy consumption. The network consumes about 32TWh of power annually with Bitcoin transaction consuming 250kWh. This is enough power to keep a standard home running for about nine days.
Why Does Bitcoin Mining Consumes So Much Power?
The main reason why Bitcoin mining consume so much power is the computational process that goes on during mining. Although no one knows how much energy is required to keep mining rigs running, the network generates one $8 billion in revenue yearly. In the highly competitive industry, the cost of electricity remains the biggest. If the power consumption continues to increase, miners may end up spending so much that they make no profit from mining.
While this seems like the case, research has shown that the Bitcoin network will not continue to consume so much energy in the coming years. It’s not necessarily going to go upward. It is going to drop in the long run. Also, the energy consumption of the network is not linked to the number of transactions performed. So, an increase in the number of Bitcoin transactions doesn’t mean an increase in the energy consumption.
Also, considering Bitcoin’s design at present, energy consumption can be linked to mining operations. So, if the price of Bitcoin goes higher, more miners will invest in mining subsequently consuming more energy. On the other hand, if the price of Bitcoin falls significantly, miners will not profit from mining and will be forced to abandon it. This will lead to a reduction in the total energy consumption of the network.
On the other hand, for the energy consumption of Bitcoin to be high enough to wreck the United States economy, the price of Bitcoin will have to go up as high as $1m. This is unlikely to happen before 2020 so there is no cause for alarm.
To reduce the network’s energy consumption, the mining algorithm will have to be changed all together and made to consume less energy