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Bitcoin Mining Using Tons of Electricity

Here’s a recent article from BusinessInsider.com talking about bitcoin mining and it’s electricity usage –

The amount of energy used by computers “mining” bitcoin so far this year is greater than the annual usage of almost 160 countries, according to new research.

Research by energy tariff comparison service PowerCompare.co.uk shows that the amount of energy expended mining bitcoin globally has already exceeded the amount used on average by Ireland and most African nations.

PowerCompare.co.uk used stats from Bitcoin and cryptocurrency data provider Digiconomist, which estimates that 29.05 TWh of electricity was used to mine bitcoin, compared to an estimated 25 TWh of electricity per year used by Ireland.

Bitcoin is a cryptocurrency that was created in 2009. It is designed to not be controlled by any one party and is underpinned by a system called blockchain, which records transactions.

To ensure transactions are not falsified or records of ownership changed, participants of the bitcoin network must sign off on transactions in “blocks” (hence, blockchain).

To incentivize people to do this work, which involves computers completing complex cryptographic problems, people who verify blocks are rewarded with freshly created bitcoin. Hence, this process is known as bitcoin “mining.”

However, the creators of bitcoin designed the system so there would only ever be a limited supply of bitcoins to be mined (a maximum of 21 million). To ensure the longevity of the system, the cryptographic problems involved in the mining get progressively harder, meaning it takes longer to earn them.

Miners are turning to more powerful computers to complete these tasks and earn bitcoin. As a result, mining (and on the flip-side, bitcoin transactions) are sucking up greater and greater amounts of electricity. Bitcoin transactions now use so much energy that the electricity used for a single trade could power a home for almost a whole month, according to Dutch bank ING.

The bulk of Bitcoin “mining” is done in China, where energy costs are comparatively cheaper than in places like the UK or US.

“The top six biggest mining pools from Antpool to BTCC are all largely based in China,” Mati Greenspan, an analyst with trading platform eToro, said in an email earlier this month. “Some rough estimates put China’s hash-power at more than 80% of the total network.”

However, there is growing concern about what the environmental impact of all this electric usage could be. Most of the electricity generated in China comes from CO2 emitting fossil fuels. Greenspan said: “We need to be mindful of how that energy is created.”

Further, according to Adam Bergman of the IRA Financial Group, “Some Chinese companies are going so far as to move to Quebec, Canada. There are two advantages: 1. the colder climate help cool the super computers needed for mining and 2. electricity comes at a far cheaper price than that of other countries.”

IRA Financial Group is one of the first Self-Directed IRA providers to offer “Wallet Control” Self Directed IRA plans. Thus, you know you’re digital currency is not only safe, but readily available day or night.

For more information about investing in Bitcoins, please contact us @ 800.472.0646.

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