Ever since ‘bitcoins’ hit the headlines as the ‘new universal currency’ there have been more skeptics than believers. Skeptics have a range of questions on bitcoins which typically relate to the security of the transaction. Most skeptics in fact question the need for crypto currencies (a class of computer generated currencies of which bitcoin is a part). On the contrary there are naysayers who really feel bitcoins are really consuming too much energy for creation or in their terms ‘mining’. This is really a point to ponder, and there have been debates on this point across the globe and at first no one really knew how much energy is consumed in the process. The popular site Blockchain which analyses key bitcoin statistics had gotten it wrong in the first place, it was a big blunder and the site has pulled it out completely. So this is a good point for energy engineers like me to think about.
I will restrict this post to the energy consumption of the crypto currency, there are many good sources like this where you can find more on bitcoin basics. I haven’t had an experience in bitcoin mining nor I have used them in any transaction so I had to rely on numbers from the web. Energy is consumed in two ends of the bitcoin transaction, at first you need to mine bitcoins and on the other end of the transaction you need to authenticate the bitcoins used in transaction. Typically the mine is called a pool and the miners call themselves workers in the pool. So they are the geeks spread across the globe or as of now mostly in China, US and Japan. The capability of a worker is directly proportional to the gadget he brings to the pool, in normal words it’s the computer or the computing device and the speed of the device. Every transaction needs a certain number of processes to generate a code and they are called hashes and they are typically in the range of Gigahashes. The pool is recognised by the speed at which it operates, i.e. Gigahashes/s (Gh/s). If you check this you will recognise the current market speed of the bitcoin, the rate at which the bitcoin world is operating. In the earlier days Graphical Processing Units (GPU) which is part of your computers were used in mining. This means a power board that is rated 1W and processing power of 1Gh/s running for 24hours a day at 8,000,000 G (the global hashrate avg i.e. the rate at which bitcoin ) would consume 80 MW of power, that’s 2GW (approx.) a day and that’s 700GWh/yr energy consumption .
Is this the real energy consumption of the bitcoin network? The answer to the question would have been a yes few years back, but the systems have been upgraded ever since. Application Specific Integrated Circuits or ASIC in short have replaced the traditional GPUs. These devices in electronics are designed for particular applications and in bitcoin mining they are indeed very specific. They are a variety of ASICs today and a good ASIC consumes one-tenth of the traditional GPU. That’s 0.1W. So using ASICs we would end up with 70GWh/yr energy consumption.
That’s roughly the annual energy consumption of 50000 average Indian Homes.
Is it too much energy being wasted? Bitcoin miners would argue that energy consumption is indeed coming down and they would turn more energy efficient in the coming years. From their perspective it has always being energy efficient and I believe they will be more energy efficient in the future. Typically bitcoin miners get close to 15-17$ a day on mining. Considering a pool of 100 miners an average miner would consume 150-190 units of electricity a day which would cost him 600-750 INR (10-13$) a day in electricity consumption. So the economics don’t work out quite well.
At the end of this small study I feel it doesn’t make any sense spending so much of energy into a new system that has no real future( at least for now). Instead the energy surplus countries (US,China) should in fact look at reducing their energy consumption and dependency on fossil fuels. That is more critical, we have to decode the problems in environment and decrypt the global warming challenge rather than built new crypto graphical currencies that complicate the prevalent problem.