Similar to the way a government would print fiat currency, the process of getting bitcoins is calling mining.
Here’s how Bitcoin Mining explains it:
“With bitcoin, miners use special software to solve math problems and are issued a certain number of bitcoins in exchange. This provides a smart way to issue the currency and also creates an incentive for more people to mine.”These maths problems are getting harder and harder, which controls the supply of the digital currency.
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It’s partly the mining process that makes bitcoin so valuable. It’s not easy to do, and there is only a finite amount of the cryptocurrency out there. At the moment, the price of bitcoin is now over $12,000. To put that into perspective, a speculative report by Saxo Bank in April said the cryptocurrency could hit “as high as $2,100 in 2017”.
The total energy use of this hardware is an estimated 31 terawatt-hours per year. This means that bitcoin mining is now consuming more electricity than a total of 159 countries.
Bitcoin mining uses up more energy than Ireland does for example or Nigeria.
Digiconomist’s report also says that if bitcoin miners were a country they’d rank 61st in the world in terms of electricity consumption.
This energy consumption is not sustainable. Grist makes the point that all this energy could be better used to charge electric vehicles or powering homes.
By 2020, the bitcoin mining network will use as much electricity as the entire world does. What will happen then?
Other sites have been found to be using its users’ computer resources to mine for cryptocurrencies.
Whilst governments are working out how to regulate bitcoin, they need to work out how to regulate the energy consumption of cryptocurrencies too.
