Energy Consumption of Crypto Mining and Its Alternative
Written By: Kenichi Yamaguchi | May 21 2021
On May 12, 2021, Elon Musk on twitter announced that Tesla will suspend Bitcoin payment due to its ongoing massive energy assumptions during the mining process. Elon further attached a graph from Cambridge Bitcoin Electricity Consumption Index, showing the drastic change of energy consumption after the rise of Bitcoin and cryptocurrency these past months.
(Source: cbeci.org, Twitter)
The cryptocurrency market has always known about its wide usage of energy. Though there are speculations that Elon knew about it all along (and most likely), it is worth the time to compare the energy consumption of Bitcoin mining against other traditional cryptocurrency, and especially green energy mining.
Alex Hern, a UK Technology editor, has broken down the process of crypto mining in a very simplistic way. Essentially, mining is a lottery that is hosted every ten minutes on the entire network. A computer would consume a large amount of “useless” calculation — a proof of work — to show scarcity. If you win the “lottery”, you receive a financial prize. Or, you would receive a credential to verify a ten-minute transaction in the network. That’s where the problems come in. When you win the “prize” in Bitcoin mining, you could receive up to 6.25 bitcoins every ten minutes, or distribute it among the pool of “winners”. This is where the problem comes in. 6.25 bitcoins currently worth about 240k USD (as of May 19, 2021), but it takes about 2.5 times the energy usage per year of Apple, Amazon, Microsoft, Google, and Facebook combined, which is about 130 TWh of electricity, according to cbeci.org. To put it in a bigger perspective, it is also about the annual electricity usage of the entire country of Norway.
Though 30% of the total energy consumption of the cryptocurrency industry is from renewable resources, crypto mining still requires roughly 61% of energy consumption by fossil fuels. This could potentially have a negative impact on the development of blockchain networks and real-life adoption of cryptocurrency in many countries. With the concern of the environment and future impacts, many developers and businesses have seeked many different ways to mine cryptocurrency in a more environmentally friendly way.
One of the companies that spotlights its importance of usage of reusable resources in crypto mining is a Canadian company called Perpetual Industries. Perpetual specializes in innovation and implementing technology into business projects. One of the crypto-related projects of Perpetual is Green Energy Mining — GEM. The GEM project mentions that with the knowledge of environmentally friendly technology, Perpetual is currently developing a low cost, green energy solution for powering large scale block chain mining operations. These renewable and surplus energy resources would include wind, solar, natural gas, hydro and geothermal that utilize battery storage technology.
(Source: Perpetual Industries)
Specifically, Perpetual Industries also highlights its specialty, the XYO Mechanical Balancing Technology. The initial application of an XYO balancer would be reducing vibration and power consumption for operation, and upon that, Perpetual also applied a lower noise emissions, mechanical wear and tear, and optimized operational efficiency into the project. With the combination of XYO Balancing Technology and project GEM, Perpetual could be a leading company in the crypto industry in developing a more efficient way for miners both economically and environmentally. After all, without the Earth, these would all mean nothing.
Reference:
Cambridge Bitcoin Electricity Consumption Index (CBECI), cbeci.org/.
“Green Energy Mining Systems (GEM).” Green Energy Mining for Energy Efficient Cryptocurrency Mining – Perpetual Industries www.perpetualindustries.com/gem-cryptomining.html.
“How Much Energy Does Bitcoin Actually Consume?” Harvard Business Review, 6 May
2021, hbr.org/2021/05/how-much-energy-does-bitcoin-actually-consume.
Kolodny, Lora. “Elon Musk Says Tesla Will Stop Accepting Bitcoin for Car Purchases, Citing Environmental Concerns.” CNBC, CNBC, 13 May 2021, www.cnbc.com/2021/05/12/elon-musk-says-tesla-will-stop-accepting-bitcoin-for-car-purchases.html.
“Mechanical Balancing Technology.” XYO Balancing Technology for Low Cost Green Energy Power Solutions, www.perpetualindustries.com/xyo-balancer.html.