One thing that has always puzzled people is the amount of energy required to run Bitcoin and mint new coins. It was almost a spectacle to those outside the cryptocurrency circle, wondering where did all those electricity go.
To put things into perspective, an estimate done by PWC, the current global power consumption for the servers that run bitcoin’s software is a minimum of 2.55 gigawatts (GW), which amounts to the energy consumption of 22 terawatt-hours (TWh) per year—almost the same as Ireland. Ireland is a country. Just saying.
Google, the search engine behemoth, in comparison used 5.7 TWh globally in 2015, to run all its operations. The astonishing point is that Bitcoin miners were consuming more power, around five times more, vis a vis the year before. And there absolutely no sign of a slow down.
So what makes Bitcoin use so much power?
Bitcoin and the myriad cryptocurrencies are founded on the premise of an immutable ledger called the blockchain. This comprises of transfer of value from one user to another. Miners dealing in cryptocurrency seek for results to an algorithmic puzzle, that has to fit in an exclusive set of requirements.
On average, the system finds such an answer and in return, the miner gets rewarded. The current rate is 12.5 bitcoins (worth around $85,000) and about $1,000 in transaction fees.
The solution that the miner found also gets added to the said blockchain. However, the blockchain does not automatically become a part of the ledger. A few more blocks need to be added before the firmer can happen. This is because solutions are found almost simultaneously and the longest and winning solution needs to be identified before it can be declared as the requisite.
Hence, to ensure that coins cannot be minted too quickly, thereby increasing the computational capacity of the system, the bitcoin protocol makes it harder for the successive discovery of solutions. Roughly every two weeks the system is recalibrated. That forces the miners to keep upgrading in order to be ahead of potential competitors and be able to reap rewards.
It is a cycle which seldom slows down. Also, more computing power requires a greater amount of electricity.
Future predictions involve quantum computers being required to fulfil the ever-growing demand of cryptocurrencies.
2019 is expected to be a good year for Bitcoin and its affiliates and would be a good time to invest.