As has been widely documented, mining bitcoin is an energy-intensive process. Data supports that notion. In fact, bitcoin mining is expected to be a major source of global energy consumption this year.
“In the first rigorously peer-reviewed article quantifying Bitcoin’s energy requirements, a Commentary appearing May 16 in the journal Joule, financial economist and blockchain specialist Alex de Vries uses a new methodology to pinpoint where Bitcoin’s electric energy consumption is headed and how soon it might get there,” reports Science Daily.
There is significant room for growth in the cryptocurrency universe. Recent data suggest a small amount of American investors own any digital currencies and, after bitcoin, the numbers of crypto ownership dwindle.
Some bitcoin bulls believe the cryptocurrency can return to $20,000 or even move to $25,000 as soon as later this year. As of this writing Thursday, bitcoin has a market value of $141.32 billion.
Mining Costs And Consumption
Estimates from de Vries confirm that bitcoin mining consumes massive amounts of energy.
“His estimates, based in economics, put the minimum current usage of the Bitcoin network at 2.55 gigawatts, which means it uses almost as much electricity as Ireland,” according to Science Daily. “A single transaction uses as much electricity as an average household in the Netherlands uses in a month.”
Mining costs are pivotal for bitcoin miners. The higher the break-even point, the more likely some smaller miners give up or temporarily get out of the game. Estimates vary on the break-even point for bitcoin mining, ranging from $6,000 to $8,000 and higher. With bitcoin currently trading just under $8,300, a break-even point of $8,000 may not be enough for some miners to take on the expense of higher energy bills.
“The huge costs associated with Bitcoin mining – a process that ‘timestamps’ transactions and performs extensive calculations – has been a subject of criticism since years. And with the increase in the network’s size, the costs are further poised to grow, possibly consuming 5 percent of the world’s total electricity in the future,” reports CCN.
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