Bitcoin is ranked 40th in terms of electricity consumption in all countries worldwide. A new study has revealed the growing energy problem.
Bitcoin’s energy crisis and Ethereum Code researched
With the energy of a Bitcoin transaction, a dishwasher could work for a year. This does not mean that Bitcoin transactions would require large amounts of energy, but only that many miners are in circulation. Currently, miners earn about $100 per transaction. Digiconomist estimates Bitcoin Miner’s power consumption in its Bitcoin Energy Consumption Index (BEXI). According to its data, Bitcoin Ethereum Code consumes 67.91 TWh annually, which is slightly more than Chile, which ranks 40th in the world at 66 TWh. They estimate the electricity consumption per transaction at 929 kWh. The biggest problem, however, is that there is no recovery in sight for the time being and energy consumption is rising steadily.
The index must calculate back the energy consumed using values from the past. It starts with how much money the miners earn and how much they are estimated to spend on electricity. Then one looks at the electricity price and estimates how much electricity is consumed. The index model is of course based on many assumptions and planning data, but it is almost impossible to determine the exact consumption.
Will the Bitcoin Lightning Network help?
The Lightning Network takes Bitcoin transactions out of the block chain by establishing channels between users. Transactions between them take place and are only recorded in the block chain when the channel is closed. This reduces the number of transactions that the nodes have to confirm, and thus the power required to maintain the network.
However, most of the power is used for Bitcoin mining. It is unlikely that the number of transactions in the block chain will affect the number of miners. Bitcoin transactions have halved since December, but the difficulty of mining has doubled, suggesting that at least twice as much hash power is used.
The International Energy Agency published that renewable energies will grow by 40 percent by 2022, stressing that renewable energies dominate the creation of new energy sources. Iceland has already shown how it can work with renewable energy. Essentially, renewable electricity enables the operation of the Bitcoin network without changing the underlying structure (PoW – Proof of Work).
Other ways to solve the problem are, for example, switching to proof-of-stake. Digiconomist estimates that Ethereum consumes about a third of the electricity. However, there are also some criticisms (centralisation…) of the proof-of-stake, so this is unlikely to be an option. As long as Bitcoins can be mined (year 2140) and the price is at an attractive level, renewable energy seems to be the only option for the first time.