The virtual currency broke new records last night, exceeding $14,000 on 7 December, before retreating. But the way in which bitcoin is created is not without consequences, especially regarding the environment.
Cryptocurrency craze around the world
Bitcoin is a cryptographic currency, (digital money), without real coins, banknotes or central bank notes. It is based on the blockchain, which is a kind of dematerialized, tamper-proof general ledger of accounts shared between millions of peer-to-peer computers.
For some, bitcoin is not a real currency. Nevertheless, it can be used for shopping, mainly on the Internet, but also in some physical stores. Since the beginning of the year, the price of bitcoin has increased tenfold. And it’s not over yet. People’s main criticism relates to the fact that cryptocurrencies like Bitcoin can be purchased in an anonymous way as explained on this “achat de bitcoins sans verification d’identité” guide.
Like gold diggers
How does the bitcoin work? To secure transactions, we need to solve mathematical equations, very complex problems, by the use of powerful computers. Anyone can use a computer to do this job. Miners (people dedicating hash power to secure the network) are then rewarded in Bitcoins.
Because this helps to create new bitcoins, this activity is very similar to that of gold diggers or miners digging for ore and is increasing every day.
Even if all this activity is virtual, there is a finite amount of bitcoins: 21 million, exactly. The mining of Bitcoins, as well as other cryptocurrencies (more than 1300 as of today), can bring in a few hundred euros per month. It all depends on how much computing power you are willing to dedicate to it.
Over-consumption of electricity
More and more people around the world are starting to mine bitcoins and other “Alt” coins. There are even mining farms, giant warehouses stuffed with computers and mining rigs, which are only used for this purpose. Most of them are found in Iceland or China as energy is quite cheap there.
A lot of people have also been caught doing crypto-jacking lately, which is pirate mining via contaminated computers used without the knowledge of their owners. As a result, all this increases electricity consumption.
According to a specialist analyst, bitcoin accounts for 0.14% of global electricity consumption. Every new transaction in this currency would consume as much electricity as a French household over the period of two weeks. And there are about 300,000 transactions a day. Some people are beginning to talk about an “ecological disaster.”
There are still a few hopefuls with new mining algorithms that are less energy-intensive and new computer chips that are less energy-intensive. Miners are also starting to invest massively into solar energy which should help in reducing the energy impact on the planet.
Bitcoin and other digital currencies are still new with less than ten years of activity for the mother of all coins, but it would not be fair to judge such a relatively new technology without giving it some time to sort out its main challenges.