Booming Bitcoin Mining is an Energy Hog
The mining of crypto-currencies is proving extremely lucrative, as witnessed by a spate of reports this week on the booming Bitcoin market. While the processing-intensive practice has been a boon to graphics chipmakers, for example, critics warn that Bitcoin fever is also neutralizing recent energy efficiency gains made in datacenters.
The website Grist.org (which bills itself as a independent news source working toward "a future that doesn't suck") asserts that the extraordinary computing power required for Bitcoin transactions and the explosion of crypto-currency mining farms is accelerating energy consumption.
With the growth of Ethereum virtual currency "mining farms," virtual prospectors are adding more and faster machines. Some have even hacked public clouds as a way to expand mining operations that require joining distributed crypto-currency networks. The added processing power needed to confirm and record transactions in a blockchain ledger is said to be greatly expanding aggregate computing power used within Bitcoin and other virtual currency networks.
Hence, energy consumption from Bitcoin mining alone is estimated to be hit 32 terrawatt-hours per year, according the website Digiconomist. "New sets of transactions (blocks) are added to Bitcoin’s blockchain roughly every 10 minutes" by miners, the website noted.
As more miners seek to get in on the action, Digiconomist argues that the energy demands required for all that processing power are unsustainable. "The continuous block mining cycle incentivizes people all over the world to mine Bitcoin," the web site reported. "As mining can provide a solid stream of revenue, people are very willing to run power-hungry machines to get a piece of it."
As the value of Bitcoins continues to grow, energy consumption on mining networks is expected to reach "epic proportions," the energy tracker warned.
Soaring deployments of Ethereum mining farms also has resulted in GPU shortages. Quarterly GPU add-in board shipments totaled $3.6 billion, market researcher Jon Peddie estimated in August. "Ethereum mining is the game changer this quarter," Peddie added.
Meanwhile, Digiconomist notes that much of the soaring energy consumption from Bitcoin mining takes place in Eastern Europe, where electricity is generated primarily from coal-fired power plants that produced relatively cheap electricity.
With countries like the Czech Republic accounting for an estimated 48 percent of Bitcoin-related energy consumption, the result is "an extreme carbon footprint for each unique Bitcoin transaction," the website asserted. It estimates the each transaction consumes about 250 kilowatt-hours, roughly the amount of electricity used by nine U.S. households per day.
With annual global Bitcoin mining revenues pegged at more than $11.3 billion, there is little reason to believe Bitcoin fever will cool. Indeed, bitcoin values soared 25 percent over a 48-hour period this week and, as of Thursday (Dec. 7), topped $16,000, according to one tracker.
As more miners seek to cash in on crypto-currency (a market that exhibits many of the characteristics of a bubble), processing power demands will only grow. As Grist.org noted, math problems that must be solved to earn Bitcoins will only become more complex as a way of controlling the supply of crypto-currencies. More processing power translates into even greater—and perhaps unsustainable—global power usage.