Mining Bitcoin takes more electricity than Ireland uses for a year

by Gabriel E. Hall - -

This week bitcoin increased the value and now it is worth $1,500 per coin, it has never been so high and passed $5,00 mark in European trade.

Bitcoin Electricity

However, it is important that Bitcoin trades use a lot of computing power and electricity. According to a report from Butch bank ING, a single transaction for a single bitcoin could power a house for a whole month.[1]

“By making sure that verifying transactions is a costly business, the integrity of the network can be preserved as long as benevolent nodes control a majority of computing power,” wrote ING senior economist Teunis Brosens.

Together, they will dominate the verification (mining) process. To make the verification (mining) costly, the verification algorithm requires a lot of processing power and thus electricity.

Bitcoin requires a huge amount of electricity for its transactions compared with other more traditional payments. For example, payments via visa use 0.01kWh per transaction, Ethereum requires 37kWh, while a single Bitcoin transaction requires even 200kWh.

Bronsens added that “Bitcoin's energy costs stand in stark contrast to payment systems that have the luxury of working with trusted counterparties.”

Moreover, creating a single Bitcoin requires more electricity than Ireland uses in a whole year. In order to create new Bitcoins, machines need to solve cryptographic problems and as the number of existing Bitcoins increases, these problems became harder to solve and also requires more computing power and energy. According to Economic Forum, mining Bitcoin uses more power than most African countries.[2]

What is more, this week Bitcoin increased its worth by almost $1,500 for a single coin. According to The Wall Street Journal,[3] Goldman Sachs was willing to establish a cryptocurrency trading operation.

According to Neil Wilson, a senior analyst at ETX Capital: “The prospect of Goldman Sachs trading Bitcoin is also driving buying as this might give it a toehold on Wall Street that could bring it into the mainstream and attract fresh inflows of capital.”

In addition, James P. Gorman, a Chairman and Chief Executive Officer of Morgan Stanley noted that the cryptocurrency was “certainly more than just a fad”.

What is more, this week researchers at Bernstein Gautam Chhugani and Gaurav Jangale indicated that bitcoin was still just a “Censorship-resistant asset class.”

“Fiat money is still the final form of settlement — governments still collect taxes in fiat money and salaries are still paid in fiat money,” they noted in the statement.[4]

 
 

About the author

Gabriel E. Hall
Gabriel E. Hall - Antivirus software specialist

Gabriel E. Hall is an antivirus software specialist at Reviewedbypro.com.

Contact Gabriel E. Hall
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