The cryptocurrency has traded at between $5,000 and $40,000 over the past year, and arguing over its true value is like a scholastic spat about angels on a pin. Could it go to six figures? Seven? Is it actually worth nothing at all? The mystery only adds to its allure.
Energy estimates aren’t an exact science, but the direction of travel for power consumption has been clear. Bitcoin’s annual consumption is estimated at around 77.8 terawatt-hours, up from 9.6 terawatt-hours in 2017, according to Digiconomist. Another index, compiled by the Cambridge Center for Alternative Finance, estimates a higher figure of around 108.4 terawatt-hours. The economics of mining outpaced the average laptop long ago, with firms like Marathon Patent Group Inc. now buying tens of thousands of specialized chips at once to power their crypto farms.
It would be one thing if this were taking place in, say, Sweden, which has a carbon tax of more than 100 euros per metric ton of CO2 (with exemptions), or within the European Union’s carbon emissions trading system, with prices at around 34 euros per metric ton. But one paper suggests almost half of the world’s Bitcoin mining capacity is situated in southwest China, where power is cheap, less taxed and supplied by coal-fired plants as well as hydroelectricity. The Cambridge Center for Alternative Finance estimates coal accounts for 38% of miner power.
Researchers have suggested that alternatives to a carbon tax could include more direct taxation of mining — though with a high likelihood of chasing such activities away.
What would Bitcoin really be worth if, in order to care for the world it set out to revolutionize, it changed its algorithm, or if miners unhooked themselves from cheap power? That’s a real price mystery.
