When Satoshi Nakamoto launched Bitcoin in 2009, it went mainstream and became the largest blockchain. Fast forward to 2022, the same issue that has characterized it and other tokens that create new blocks via mining is still there.
Mining activities have increased and have become energy intensive. As there are more miners and blocks to verify their validity, energy usage has drastically increased.
According to data released in the Bitcoin Mining Council Quarter 3 (Q3) report of 2022, Bitcoin Energy usage has increased by 41%. The increase is based on Year on Year (YoY) energy consumption of the 51 largest Bitcoin mining companies worldwide.
According to the Bitcoin Mining Council report of November 2022, Bitcoin mining accounts for 0.16% of global energy consumption. Similarly, the carbon emission from BTC mining is about 0.10% of the global emission. Experts consider energy usage inconsequential to the total percentage consumed by other activities, while the emission is negligible.
The report also showed that BTC energy consumption is directly proportional to the network's hash rate. So the increase in energy usage is due to the increase in hash rate by 8.3% in Q3 2022 and 73% Year on Year (YoY).
Reports show that Bitcoin consumes electricity at an annualized rate of 127 terawatt-hours (TWh). It uses 707 kilowatt-hours (kWh) of electricity per transaction, 11 times that of Ethereum. Interestingly, Bitcoin energy usage exceeds the total annual electricity consumption of Norway.
The main reason for this high energy usage is its consensus mechanism. BTC uses the Proof-of-Work (PoW) mechanism. To verify transactions, computers or nodes are required to solve complex equations. It is the same process involved in verifying the validity of all transactions on the chain.
The reward system makes it more complex. Multiple miners hustle for the task when there is the need to create a new block, update an existing block, or verify the validity of a transaction on the BTC network.
In the end, the fastest miner becomes lucky and gets the reward. So all the energy deployed by thousands of miners from different terminals becomes a waste.
The more miners are involved in the race to solve the mathematical puzzle during this mining activity, the more carbon emission.
So now that there are more miners and mining facilities, energy consumption and carbon emission have drastically increased.
Aside from energy consumption, the BMC report showed that Bitcoin mining efficiency has increased by over 5,814% in the last eight years and by 23% Year on Year (YoY).
Amidst energy consumption and carbon emission, even though they are considered inconsequential and negligible, there are growing concerns from environmentalists and regulatory bodies.
The former considers Bitcoin harmful to the environment, while the latter might introduce regulations to charge more for BTC mining activities.
Experts, however, opine that miners can shift to renewable energy while Bitcoin developers switch to a Proof-of-Stake mechanism.
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