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How does crypto mining consume so much energy?

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The graphics cards on mining rigs work 24 hours a day, which consumes a lot more power than browsing the web. A rig with three GPUs can consume 1,000 watts of power or more, which is equivalent to turning on a medium-size window AC unit. 

 

There are mining farms in China that mine 750 bitcoins a month but have a monthly electricity bill of over $1 million. A mining center in Kazakhstan runs 50,000 mining rigs at one location. 

 

There are several built-in computer fans on many mining rigs. If you don't want to melt your rigs, you need some cooling. The more rigs you have, the hotter it gets. A small operation, like one run by an individual, can get by with a typical standing fan. However, if you have several rigs, the room quickly gets hot, requiring external cooling.

 

However, mining centers require much more cooling, which in turn requires even more electricity. 

What is the energy consumption of mining? 

According to Digiconomist's Bitcoin Energy Consumption Index, one bitcoin transaction consumes 1,449 kWh, which is about 50 days of electricity for the average US household. Get more info about bitmain s19 profitability.

 

Based on the US average cost per kWh, a bitcoin transaction would generate approximately $173 in energy costs. 

 

According to the Bitcoin Energy Consumption Index, Bitcoin mining consumes about the same amount of energy as Argentina, and at 131.26 terawatt-hours, crypto mining ranks in the top 30 countries in terms of energy consumption. 

 

Bitcoin mining consumed more than 200 terawatt-hours of energy at the end of 2021 and early in 2022. 

Is it bad for the environment to use so much energy? 

In the US, fossil fuels account for more than 60% of energy. A majority of that percentage is natural gas and a minority is coal. By burning fossil fuels, carbon dioxide is released into the atmosphere, where it absorbs heat from the sun and causes greenhouse effects. 

 

As mining rigs consume more energy, nearby power plants must produce more electricity to compensate, which increases the likelihood that fossil fuels will be used. Some states with struggling coal power plants, like Montana, New York, and Kentucky, are wooing crypto mining companies to make money. 

 

Additionally, there is the issue of electronic waste. This can include broken computers, wires, and other equipment no longer needed by the mining facility. Bitcoin mining generates 34 kilotons of electronic waste annually, which is comparable to what the Netherlands produces.

How is this energy problem being addressed?

The 3rd Global Crypto asset Benchmarking Study from the University of Cambridge found that 70% of miners made their decision based on the daily reward amount. Energy consumption only accounts for 30% of the decision. 

 

The availability of cheap hydroelectric power in Sichuan Province in China attracts crypto miners. Due to its abundance of cheap energy, Sichuan Province has the second-largest number of miners in the country. The rainy season generates so much energy that cities are looking for blockchain companies to relocate. In late 2021, China cracked down on bitcoin mining farms due to energy shortages, but the farms went underground and recovered. 

 

It appears that Ethereum's operators, the second most popular and energy-consuming blockchain behind bitcoin, are trying to reduce the amount of energy its miners consume. An upgrade called Ethereum 2.0 is currently being tested. Rather than computers solving computations -- referred to as the proof-of-work protocol -- computers will be randomly selected to create blocks for the blockchain, and computers that weren't selected will verify those blocks. 

 

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Proof of stake refers to the fact that miners must stake 32 ether coins, which are equivalent to $47,000, to ensure miners do their jobs. Ethereum is scheduled to transition to the new protocol on Sept. 19, but this date is not final. This change should reduce the amount of energy needed for mining by 99.95%.  

Is there another crypto that is more energy-efficient than Bitcoin?

Ethereum 2.0 will transition to the proof-of-stake protocol over the coming years, which will result in a decrease in power consumption for a growing number of coins -- there are over 19,000 of them. Read more: www.2140miner.com

 

A proof-of-stake protocol, for example, was used by Cardano in 2021, which consumed 6 gigawatt-hours. A proof-of-space protocol is employed by Chia. Instead of requiring intensive computation, Chia requires farmers to allocate space on a computer's hard drive, called plots, which will be called upon by the blockchain based on certain factors. 


Creation date: Dec 19, 2022 11:54pm     Last modified date: Dec 19, 2022 11:55pm   Last visit date: Jan 28, 2023 6:25am