Guest Post was written by: Sean Mortberg, an aspiring tech writer and a student at the University of Louisville in Louisville, Kentucky.
With the rising popularity of cryptocurrency and $1.5 billion invested in ICOs last month, it is important to understand the environmental impact that the Bitcoin-mining industry is having on our planet’s energy usage. Experts in the field estimate that Bitcoin operations utilize 1-4 gigawatts of electricity, roughly 1% of U.S. electricity usage.
This number might sound small, but it is an accurate assessment compared to claims by Digiconomist and Power Compare, sites which made exaggerations comparing Bitcoin energy usage to the entire electricity consumption of Singapore and the creation of 24,000 metric kilotons of CO2 emissions annually.
While the real numbers are not as grave as these sites assert, it is clear that the crypto-mining process still creates a situation needing attention. Mining has grown in difficulty 89% just in the past year, and more difficult mining requires more computer power. The faster servers get at solving cryptographic puzzles, the more electricity will get wasted.
Decentralization poses a two-fold problem where environmental regulation is needed in a loosely regulated industry. Some top crypto-mining countries including China (58%), the U.S. (16%), and Iceland report high amounts of energy waste as a result of cryptocurrency mining, with China planning to regulate and limit the amount of electricity permitted to mine and Icelandic crypto-mining (840 gigawatt hours/year) using more power than residential homes (700 gigawatt hours/year).
Many ICOs have taken initiative in more environmentally friendly mining processes, including faster and more efficient Bitcoin Lightning, Ethereum’s hybrid Proof-of-Work/Proof-of-Stake Casper system, and even hydro-powered mills to lessen the impact of the growing industry. Other startups are using wind and solar power.
The crypto craze isn’t just impacting the financial sector. Learn more about the effects of cryptocurrency mining on energy usage with the infographic below, provided by The Merkle.