Elon Musk didn’t start the environmental cryptocurrency conversation but like everything else he does, he took it to a whole other level. If you’ve read any of the stories that have come out in the wake of Musk’s decision to suspend Tesla’s acceptance of Bitcoin, you’ve probably heard about the extensive energy use required to mine cryptocurrency and specifically Bitcoin. So, what’s real? Is cryptocurrency an environmental disaster in the making? Let’s take a closer look by investigating what it takes to mine Bitcoin.
The primary reason Bitcoin has emerged as the superstar of the crowded cryptocurrency world is due to limited supply that’s arduous to mine. To that end even if you’re a whiz-bang smart mathematics-computer expert, you’re still not going to be able to successfully mine. Not without some serious tools. In order to mine Bitcoin, you need ASIC, or application-specific integrated circuits. AKA Serious hardware.
To give you an idea, the hardware requires the energy it takes to power about 500,000 devices. That’s where the environmental conversation enters the equation. The amount of energy needed is no joke. But that’s only part of the equation. It’s not just the equipment required, and the power required by the equipment, it’s also where most of the mining is happening.
China currently accounts for 70% of the global mining for Bitcoin and to put it mildly, their energy efficiency/environmental standards are lacking. While China has the world’s largest population, its carbon output is higher than the United States, India, and Russian Federation combined. All while being a largely undeveloped country.
In the United States, carbon output per person has dropped progressively since 2007, driven by fuel efficiencies, alternate energy resources, and improved technology. China, on the other hand, has seen output continue to rise every year. According to Yale University’s Environmental Performance Index, China's environmental policy remains among the worst in the world.
With the recent cryptocurrency boom, more mining than ever is taking place by those hoping to strike it rich. The overwhelming majority of that activity is happening in China, exacerbating the already draconian environmental policy tolerated by the communist regime. Though cryptocurrencies have existed for as long as the consumer internet, the concept of mining for them is still foreign to most people. Just as traditional mining has an ecological impact, so does cyber mining.
Elon Musk hopes to develop more energy-efficient ways for the industry to support its craft. The question is if most of it is happening in China, how much would it really matter?
Photo by: Getty Images