Intuitively, this does not seem possible. Cryptocurrency is an energy hog. After all it, it doesn’t make anything or seem to use scarce resources. However, we alluded to this phenomenon in June. Now, we dig a lot deeper.
For excellent insights about the world of cryptocurrency, look at “Crypto Banking and Decentralized Finance, Explained” in the New York Times.
Believe It Or Not: Cryptocurrency Is an Energy Hog
Since cryptocurrency is intangible, how can this be? To learn why, read on.
Cryptocurrencies have emerged as one of the most captivating, yet head-scratching, investments in the world. They soar in value. They crash. They’ll change the world, their fans claim, by displacing traditional currencies like the dollar, rupee, or ruble. They’re named after dog memes.
And in the process of simply existing, cryptocurrencies like Bitcoin, one of the most popular, use astonishing amounts of electricity. We’ll explain how that works in a minute. But first, consider this: The process of creating Bitcoin to spend or trade consumes around 91 terawatt-hours of electricity annually. More than is used by Finland, a nation of about 5.5 million.
That usage, which is close to half-a-percent of all the electricity consumed in the world, has increased about tenfold in just the past five years. In the early days of Bitcoin, when it was less popular and worth little, anyone with a computer could easily mine at home. Not so much anymore.
Today you need highly specialized machines, a lot of money, a big space and enough cooling power to keep the constantly running hardware from overheating. That’s why mining now happens in giant data centers owned by companies or groups of people.
Now, review these Times’ illustrations by Eliana Rodgers.