By Daniel J. McLaughlin
At the time of writing, one Bitcoin is worth £2,786.52 ($3,604.00). Not one, but 12.5 bitcoins, can be yours if you can solve a complicated mathematical puzzle. All it requires is a computer with powerful computing chips, specifically crafted software that can run day and night, and a huge amount of electricity.
This is a process known as Bitcoin mining. So far, there have been over 17.3 million bitcoins mined. There is a limit to how many bitcoins will be in circulation with founder Satoshi Nakamoto (a pseudonym) setting a 21 million bitcoin threshold.
The cryptocurrency is racking up a massive electricity bill, guzzling up the same amount of energy as some countries.
In November 2017, the power consumed by the entire Bitcoin network was estimated to be higher than that of the Republic of Ireland (about 24TWh - terrawatt hours). And it is showing no signs of slowing down. Bitcoin miners are consuming about five times more power than they did in 2017, and its energy use is doubling every six months. By the end of last year, it was expected to reach the annual consumption of the Czech Republic (about 67TWh) - that's almost half a per cent of the world's electricity consumption.
Digiconomist estimates that the current Bitcoin and Bitcoin Cash energy use is around 70 terawatt hours per year, equalling the consumption of Switzerland.
Bitcoin generated around 69 million metric tons of CO2 in 2017. "To put this in perspective," Vice's Daniel Oberhaus explains, "that is a little over one percent of all CO2 emissions from energy production globally." That's a massive energy budget, especially for a cryptocurrency that accounts for just 0.03 per cent of all cashless transactions globally.
The cryptocurrency uses as much CO2 a year as one million transatlantic flights, and it is posing a threat to the climate. The Guardian's Alex Hern argues that we cannot afford to ignore Bitcoin's energy usage. He explains: "Burning huge amounts of electricity isn't incidental to Bitcoin: instead it's embedded into the innermost core of the currency, as the operation known as "mining".
"In simplified terms, bitcoin mining is a competition to waste the most electricity possible by doing pointless arithmetic quintillions of times a second. The more electricity you burn, and the faster your computer, the higher your chance of winning the competition."
Hern adds: "Burning more electricity increases your chances of winning, but correspondingly decreases everyone else's - and so they have a motivation to burn more electricity in turn."
If Bitcoin continues to expand, it could boost global warming to 2C in just 22 years, according to researchers from the University of Hawaii at Moana. And that's their most conservative appraisal. If the average rate of technology uptake is used instead, this number is closer to 16 years.
The elusive nature of Bitcoin mining means that determining its carbon footprint can be a bit complicated. "To work it out, the scientists analysed the power efficiency of computers used in bitcoin mining, the location of miners around the world and the CO2 emissions from electricity in those countries," the Independent reports.
Opinions differ on the actual usage in the Bitcoin network, Coin Central notes. "For now," they write, "it seems that estimation really is in the eye of the beholder."
Forbes is one of the publications sceptical about the estimations, believing that the mining of the cryptocurrency does not consume as much power as previously thought. A more accurate estimate is closer to 35TWh, they argue, which is less than the annual energy consumption of Luxembourg, a country of over half a million people. This figure comes from CoinShare Research analysts Chrisopher Bendiksen and Samuel Gibbons, who point out that hardware efficiency is improving by 81 per cent every year, while the cost of hardware is almost cut in half on an annual basis.
"This means miners are increasingly able to do much more for much less," they explain. Bitcoin miners also prefer to work in colder climates, which lowers cooling costs, and they largely rely on cheap green energy.
Most of the mining uses energy from fossil fuels, but the question of blame maybe should not fall on Bitcoin - but rather the world's attitudes and reliance on fossil fuels for electricity. One of the early concerns about the cryptocurrency was that almost all of it was sourced at polluting coal power plants in China. Many of the miners have moved out of China, Quartz reports.
"In many of the places they’ve ended up, there is plenty of clean energy available. For example, the Canadian province of Quebec actively courted cryptocurrency companies to use the spare hydropower capacity it had built. The same is true of Iceland (with its spare geothermal) and Sweden (which, like Quebec, has plenty of hydropower)," they write.
Bitcoin can make the big bucks, but it does so through an enormous amount of electricity. It wants to take over the world, and it is using country-sized energy consumption to attempt this goal.