Cryptocurrency mining requires a huge amount of electricity as well as crypto miner hosting. According to experts, consumption in this area will only grow as the cryptocurrency continues to rise in value. Will it lead to an energy collapse?
Scientists at Cambridge University calculated that mining consumes about 121.36 terawatt hours (TWh) per year.
That exceeds the power consumption of entire countries: Argentina (121 TWh), the Netherlands (108.8 TWh) and the United Arab Emirates (113.2 TWh), and is almost comparable to Norway, which spends 122.2 TWh of electricity per year. For example, Slovenia consumes 1.08 terawatt hours of electricity per month.
The annual amount of energy consumed by mining would be enough to power all of the UK's electric kettles for 27 years. Or to power the entire University of Cambridge for 688 years.
Most of the energy is used to mine bitcoins. At the same time, the amount of energy released is equivalent to emitting 7.6 million tons of carbon dioxide into the environment. This is the amount of exhaust gas emitted by a mid-range car that covers a distance of 43.6 billion kilometers.
German mathematician Moritz Strubeck made calculations for Germany and found that mining does not pay for itself because the price of electricity is too high. In the country, 1 kwh costs 29 euro cents. If all the mining equipment in Germany, it would have to pay 4.22 billion euros a year for electricity.
Because of constant halving – reducing the reward to miners for adding a new block to the blockchain by half – 328,500 new bitcoins are mined per year. It occurs approximately once every four years. Thus, mining is unprofitable in Germany.
High electricity prices in most European countries force users to place mining farms elsewhere. This is also affected by the climate factor. For example, in Iceland, 1 kWh is relatively cheap – only 10 euro cents.
In addition, the country is quite cold, so you can spend less on cooling systems. In Venezuela people are actively buying video cards: cheap electricity allows them to earn about $3 thousand a month which is a lot of money for a poor country.
The Chinese factor
China accounts for most of the energy consumption and income from mining. It is in China that two-thirds of the volume of coins are mined, in a country where coal is a major resource for electricity. China is home to the six largest mining pools. Four Chinese provinces have already completely banned mining on their territory, the official reason for the ban was too high energy consumption.
However, Chinese miners have not stopped and went to the southwestern provinces, where the price of electricity is less than in the northern areas.
Forecasts by Chinese scientists from Tsinghua University and British scientists from the University of Surrey are alarming: China's energy consumption may peak as early as 2024, with carbon dioxide emissions reaching 130 million tons. Then China's mining will surpass the energy consumption of entire countries, such as Italy and Saudi Arabia.
The enthusiasm for cryptocurrency in developing countries leads to a shortage of electricity. In Iran, citizens criticize the government for periodic power outages in major cities. Iranian President Hassan Rouhani said the outages are due to cryptocurrency mining.
The ban, which went into effect, will remain in effect until September 22. Iran mines 4.5% of the world's cryptocurrency, and local miners consume about 600 MW a year.
There are official miners in the country who operate under a license under a law passed in 2019. They pay a higher rate for electricity.
They sell the mined cryptocurrency to the Central Bank of Iran. However, the authorities estimate that 85% of mining in the country is done without a license. Often, enterprising Iranians mine in mosques because electricity is free there.
Shared by each
Employees of the Cambridge Center for Alternative Finance have developed an online program that calculates electricity consumption for the production of cryptocurrencies. Researchers say that the computers that mine cryptocurrency around the world operate at different efficiencies.
But if you take the average price of a kilowatt hour and the energy consumption of a computer network, you can calculate how much electricity is used for cryptocurrency mining.
Experts also calculated how much electricity a single miner consumes. For this purpose, the experts took as an example a single-type miner Antminer T9, one of the most popular in the crypto-world for bitcoin mining. The cost of this equipment is up to $2.5 thousand. The consumption of the specialized gadget reaches 1700Wh.
For uninterrupted operation during a day, 40.56 kWh will be required. With an average electricity price of 5.5 cents per kWh per day, the miner will spend at least $2.23. In a month the cost would be $70, and in a year $1815.
Antminer T9 mines 0.001 BTC per day, which at the current exchange rate of $33.2. Profit miner per month will be $996. If there are several devices installed, respectively, this figure will increase as many systems are installed
According to various estimates, miners spend about 10% of their profits to pay for electricity. Different devices are required to run a mining farm, and electricity is needed around the clock. Computing that unlocks blocks of transactions requires uninterrupted power for video cards, processors and ASIC equipment, as well as a cooling system.