Burgeoning demand of electricity from Bitcoin has attracted almost as much attention as the wildly fluctuating value of cryptocurrency. But estimating exactly how much of the electricity the Bitcoin network makes use of is necessary for the understanding of its impact and policy implementation remains much of a challenge. In the first rigorously peer-reviewed article that quantifies energy requirements of Bitcoin, a commentary appearing in the journal Joule, financial economist and blockchain specialist Alex de Vries has used a new methodology in a bid to pinpoint where electric consumption of Bitcoin is headed and how soon it might get there.
A Single Transaction Uses as Much Electricity as that of an Average Dutch Household Uses Per Month
de Vries, who works at the Experience Center of PwC in the Netherlands and is the founder of Digiconomist (@DigiEconomist), a blog that aims to better inform cryptocurrency users said that they have seen a lot of back-of-the-envelope calculations, but there is a need for more scientific discussion on where this network is headed to. A present, the information that is available is of pretty poor quality and so there is a hope that people will make use of this paper as a foundation for further research, adds Vries.
According to his estimates that are based on economics, the current minimum usage of the Bitcoin network stands at 2.55 gigawatts, which means that it makes use of almost as much electricity as of Ireland’s. A single bitcoin transaction makes use of much electricity as an average household in the Netherlands uses in a month.
Bitcoin is totally dependent on computers that time-stamp transactions into an ongoing chain so as to avoid duplicate spending of coins. Computers in the network perform does calculations constantly, thereby competing for the chance, once every ten minutes, to be appointed to create the next block of transactions in the chain. The user of the computer that wins is awarded with 12.5 new coins a process that is known as “mining” Bitcoin.