There are now hundreds of cryptocurrencies in existence and the technological backbone of many of these currencies is blockchain, a digital ledger of transactions. The competitive process of adding blocks to the chain is computation-intensive and requires large energy input. Experts have developed a method a methodology for calculating the minimum power requirements of several cryptocurrency networks and the energy consumed to produce one US dollar’s (US$) worth of digital assets. From 1 January 2016 to 30 June 2018, it is estimated that mining of Ethereum, Litecoin and Monero consumed this average to generate one US$.
Fortunately, today there are alternatives to the traditional blockchain, which has tried to solve the problem with power consumption. One of them is IOTA, with their new and innovative technology called Tangle, they are solving this topic. IOTA has long been in terms of energy consumption where Ethereum wants to go. The reason is that IOTA does not require the energy-intensive mining of blocks. The total number of IOTA’s is already available from the beginning.
The energy consumption at Blockchain is caused by Miner. In IOTA’s Tangle, however, each participant contributes to the process of validating the transactions so that consensus is achieved without the need for miners. Simply stated, before you can make a transaction, you must confirm two random previous transactions on the network. In this way, each participant in the network is a separate miner with its own device.
Since this validation does not require heavy calculations, the network can be maintained by relatively small devices with limited power and computational capacity. Of course, the IOTA nodes and transactions also consume computing power and thus generate power consumption, but this is negligible compared to that caused by traditional blockchain technology.
This is also one of the reasons why IOTA can target the growing market with sustainability. This is more important today and IOTA is very well prepared for the future with regard to this topic
The virtual currency Bitcoin is created during mining. The miners' computers have to solve arithmetic tasks and are rewarded with bitcoins. As the tasks become more and more difficult, a living room PC is no longer enough. Miners run server farms, so-called mines, which fill entire halls. It is difficult to estimate how high their electricity consumption is, since the miners are reluctant to look at the cards. But now researchers from MIT and TU Munich have presented figures. Just like the Dutch researcher Alex de Vries last year.
Bitcoin system consumes 46 TWh per year
The scientists at MIT and TUM allocate an energy requirement of 46 terawatt hours (TWh) per year to the mining of bitcoins. That is much. The energy hunger of the cryptocurrency is comparable to that of Jordan. For comparison: An average 2-person household consumes around 3,500 to 4,000 kilowatt hours (kWh) per year, i.e. 0.0000035 TWh.
A year earlier, the economist de Vries estimated that around 42,000 KWh would be needed to mine a single Bitcoin. However, this theoretical minimum value is based on the assumption that all miners use the most efficient hardware, such as so-called Asic miners. But that is by no means the case with every prospector, which is why de Vries estimated the actual consumption of bitcoin mining even higher. "The energy consumption of the Bitcoin system is breathtaking," de Vries said in 2018 in an interview with Spiegel Online. "It currently uses about 67 terawatt hours a year."
Carbon footprint: regulation of crypto mining makes sense?
Mining not only needs energy, it also causes CO2 emissions. Around 22 megatons of carbon dioxide a year, according to the researchers at MIT and TUM. And thus roughly as much as the Hanseatic city of Hamburg with its approximately 1.8 million inhabitants or the desert city of Las Vegas with its almost 642,000 inhabitants.
The question of the environmental impact of mining has long accompanied Bitcoin and has so far not been able to significantly slow down the boom in the digital currency. The poor CO2 balance of bitcoin is, however, also driven up by the location of the miners. According to the latest study, two thirds of all miners come from Asian countries. The scientists used this information to include the CO2 balance of the power supply in these countries in their calculations. If the majority of miners were located in Sweden, where the share of energy from renewable sources is around 55%, the balance would look very different.
Christian Stoll, co-author of the current study by MIT and TUM, calls for political consequences to reduce the carbon footprint of mining. "The CO2 footprint is so large that it offers enough reason to discuss the regulation of crypto mining at locations with CO2-intensive electricity production," said the doctoral candidate at the Chair of Controlling at the TU Munich. He suggests that mining farms be obliged to increasingly source their energy from renewable sources. For example by generating electricity from wind, sun or geothermal energy.
How the researchers calculated energy consumption
In order to obtain the data on electricity consumption, the researchers from the Technical University of Munich and the Massachusetts Institute for Technology evaluated a large amount of data and finally combined the results. Among other things, the scientists examined:
the power consumption of the network, which they took from the stock documents of hardware manufacturers of so-called Asic miners.
the location of the digging. For large farms, the researchers assumed additional energy consumption due to the necessary cooling of the mainframe.
the Bitcoin prospector's IP addresses. Here the researchers used data from so-called mining pools. "In these groups, miners pooled their computing power in order to get their turn faster when solving the arithmetic tasks - similar to a syndicate," explains Stoll.
Stoll sees the reason for the deviating numbers of previous studies in the scientific approach. Previous studies have therefore been "based on numerous estimates". The data that he and his colleagues used to quantify energy consumption and carbon dioxide emissions, on the other hand, enabled the most detailed calculation to date.
ver since its inception Bitcoin’s trust-minimizing consensus has been enabled by its proof-of-work algorithm. The machines performing the “work” are consuming huge amounts of energy while doing so. The Bitcoin Energy Consumption Index was created to provide insight into this amount, and raise awareness on the unsustainability of the proof-of-work algorithm.
Note that the Index contains the aggregate of Bitcoin and Bitcoin Cash (other forks of the Bitcoin network are not included). The latter has been removed per October 1, 2019. A separate index was created for Ethereum, which can be found here.
What kind of work are miners performing?
New sets of transactions (blocks) are added to Bitcoin’s blockchain roughly every 10 minutes by so-called miners. While working on the blockchain these miners aren’t required to trust each other. The only thing miners have to trust is the code that runs Bitcoin. The code includes several rules to validate new transactions. For example, a transaction can only be valid if the sender actually owns the sent amount. Every miner individually confirms whether transactions adhere to these rules, eliminating the need to trust other miners.
The trick is to get all miners to agree on the same history of transactions. Every miner in the network is constantly tasked with preparing the next batch of transactions for the blockchain. Only one of these blocks will be randomly selected to become the latest block on the chain. Random selection in a distributed network isn’t easy, so this is where proof-of-work comes in. In proof-of-work, the next block comes from the first miner that produces a valid one. This is easier said than done, as the Bitcoin protocol makes it very difficult for miners to do so. In fact, the difficulty is regularly adjusted by the protocol to ensure that all miners in the network will only produce one valid block every 10 minutes on average. Once one of the miners finally manages to produce a valid block, it will inform the rest of the network. Other miners will accept this block once they confirm it adheres to all rules, and then discard whatever block they had been working on themselves. The lucky miner gets rewarded with a fixed amount of coins, along with the transaction fees belonging to the processed transactions in the new block. The cycle then starts again buy IOTA.
The process of producing a valid block is largely based on trial and error, where miners are making numerous attempts every second trying to find the right value for a block component called the “nonce“, and hoping the resulting completed block will match the requirements (as there is no way to predict the outcome). For this reason, mining is sometimes compared to a lottery where you can pick your own numbers. The number ondemand of attempts (hashes) per second is hpdesignjetrepairs given by your mining equipment’s hashrate. This will typically be expressed in Gigahash per second (1 billion hashes per second).
The continuous block mining cycle incentivizes people all over the world to mine Bitcoin. As mining can provide a solid stream of Schlüsseldienst revenue, people are very willing to run power-hungry machines to get a piece of it. Over the years this has caused the total energy consumption of the Bitcoin network to grow to epic proportions, as the price of the currency reached new highs. The entire Bitcoin network now consumes Alarmsysteme more energy than a number of countries, based on a report published by the International Energy Agency. If Bitcoin was a country, it would rank as shown Yoga below.