Wednesday, June 29, 2022

How Much Electricity Does Crypto Mining Use

Why Is Bitcoin Mining So Energy Intensive

How Much Does It Cost To Run A Crypto Miner 24/7

Crypto critics often cite the environmental impact of Bitcoin mining as a major reason for concern, but why exactly is mining so energy intensive? And what exactly is Bitcoin mining in the first place?

Simply put, Bitcoin mining is the process by which more Bitcoin is created. But its more than that: Bitcoin mining is integral to how Bitcoins function as a cryptocurrency.

How Much Energy Does Mining Take

The Digiconomist’s Bitcoin Energy Consumption Index estimated that one Bitcoin transaction takes 1,544 kWh to complete, or the equivalent of approximately 53 days of power for the average US household.

To put that into money terms, the average cost per kWh in the US is 13 cents. That means a Bitcoin transaction would generate more than $200 in energy bills.

Bitcoin mining used more energy than Argentina, according to an analysis from Cambridge University in February. At 121.36 terawatt-hours, crypto mining would be in the top 30 of countries based on energy consumption.

A wall of mining rigs in Quebec, Canada.

How Do I Guess At The Target Hash

All target hashes begin with a string of leading zeroes. There is no minimum target, but there is a maximum target set by the Bitcoin Protocol. No target can be greater than this number:

00000000ffff0000000000000000000000000000000000000000000000000000

The winning hash for a bitcoin miner is one that has at least the minimum number of leading zeroes defined the mining difficulty.

Here are some examples of randomized hashes and the criteria for whether they will lead to success for the miner:

To find such a hash value, you have to get a fast mining rig, or, more realistically, join a mining poola group of coin miners who combine their computing power and split the mined Bitcoin. Mining pools are comparable to those Powerball clubs whose members buy lottery tickets en masse and agree to share any winnings. A disproportionately large number of blocks are mined by pools rather than by individual miners.

In other words, it’s literally just a numbers game. You cannot guess the pattern or make a prediction based on previous target hashes. At today’s difficulty levels, the odds of finding the winning value for a single hash is one in the tens of trillions. Not great odds if you’re working on your own, even with a tremendously powerful mining rig.

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Switch To Renewable Energy

Currently, an estimated 39% of proof-of-work mining is performed using renewable energy. So perhaps the most obvious path to a green future for Bitcoin is simply upping that figure.

Countless startups have emerged to address this gap, each targeting new ways to bring more environmentally friendly energy to Bitcoin. Take Hong Kong-based LiquidStack, which aims to more efficiently lower the temperature of mining rigs, or Genesis Mining in Iceland, which exclusively uses renewable energy sources.

These solutions, however, fail to address that even if all energy pumping into the Bitcoin industrial complex were green, at large scale its proof-of-work verification technology is inherently wasteful.

Bitcoins Energy Use Vs The Atms And Bank Data Centers

What cryptocurrency is more power efficient in mining than ...

Bitcoin advocates argue that all industries use a lot energy, and that its unfair to single out bitcoin. A May analysis by the crypto firm Galaxy Digital, for example, pointed out that bitcoin consumes a lot less electricity than the ATMs and data centers of traditional banks. Of course, traditional banks serve vastly more people than bitcoin. So the question becomes subjective: How much energy use is justifiable for a fledgling industry that benefits only a relatively tiny number of speculators?

The bitcoin mining community leans on an oft-repeated, but so far mostly unsupported, claim that their activities could actually expedite the construction of new solar and wind farms without diverting power from other useshouses, hospitals, warehouses, electric vehicles, literally almost anything that uses electricity. If crypto holders want to retain the value of their investment and not continue to draw the ire of regulators or market-moving billionaires, time is running out to implement solutions.

In May, Elon Musk said Tesla would no longer accept bitcoin as a payment method because of environmental concerns, and the currencys value promptly tanked. And on June 21 it sank to its second-lowest point since February, after financial authorities in China renewed a crackdown on cryptocurrency mining operations. It was a move motivated at least partially by climate considerations .

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Mining And Bitcoin Circulation

In addition to lining the pockets of miners and supporting the Bitcoin ecosystem, mining serves another vital purpose: It is the only way to release new cryptocurrency into circulation. In other words, miners are basically “minting” currency. For example, as of September 2021, there were around 18.82 million bitcoins in circulation, out of an ultimate total of 21 million.

Aside from the coins minted via the genesis block , every single one of those bitcoins came into being because of miners. In the absence of miners, Bitcoin as a network would still exist and be usable, but there would never be any additional bitcoin. However, because the rate of bitcoin “mined” is reduced over time, the final bitcoin won’t be circulated until around the year 2140. This does not mean that transactions will cease to be verified. Miners will continue to verify transactions and will be paid in fees for doing so in order to keep the integrity of Bitcoin’s network.

Aside from the short-term Bitcoin payoff, being a coin miner can give you “voting” power when changes are proposed in the Bitcoin network protocol. This is known as a BIP . In other words, miners have some degree of influence on the decision-making process on such matters as forking.

What Is A 64

Here is an example of such a number:

0000000000000000057fcc708cf0130d95e27c5819203e9f967ac56e4df598ee

The number above has 64 digits. Easy enough to understand so far. As you probably noticed, that number consists not just of numbers, but also letters of the alphabet. Why is that?

To understand what these letters are doing in the middle of numbers, let’s unpack the word “hexadecimal.”

The decimal system uses as its base factors of 100 . This, in turn, means that every digit of a multi-digit number has 100 possibilities, zero through ninety-nine. In computing, the decimal system is simplified to base 10, or zero through nine.

“Hexadecimal,” on the other hand, means base 16, as “hex” is derived from the Greek word for six and “deca” is derived from the Greek word for 10. In a hexadecimal system, each digit has 16 possibilities. But our numeric system only offers 10 ways of representing numbers . That’s why you have to stick letters in, specifically letters a, b, c, d, e, and f.

If you are mining Bitcoin, you do not need to calculate the total value of that 64-digit number . I repeat: You do not need to calculate the total value of a hash.

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Do Bitcoin Mining Energy Costs Affect Its Price

In general, as something increases in supply , the price of it will decrease. So you would think that as more and more bitcoins are mined, that the relative value of each one would decrease however, thats not the case.

Though mining equipment is improving in efficiency and there are reduced energy costs in the sense that miners can mine more Bitcoin given the same amount of energy used, Bitcoin hasnt declined in price.

The reason for this is because the difficulty of the complex math problems required to earn Bitcoin have increased as well as the fact that the number of Bitcoins rewarded for correctly guessing the target hash will be halved approximately every 4 years.

So, to summarize the electricity costs of crypto mining dont really affect the price of Bitcoin, but what it does affect is the profitability of Bitcoin mining.

Ccaf’s Reported Annual Energy Use Numbers

Why bitcoin uses so much energy | CNBC Explains
  • Norway 122.20 TWh per year
  • Argentina 121 TWh per year
  • The United Arab Emirates 113.20 TWh per year
  • Netherlands 108.8 TWh per year
  • Bitcoin 121.36 TWh per year

Proving a direct correlation between the CCAF report and market prices is hard to do, but it could be more than a coincidence that the time that the story gained momentum coincided with the froth being blown off the top of the Bitcoin market. Between March and June of 2021, the price of Bitcoin fell by 46%.

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How Bitcoin Is Mined And Where

It used to be that anyone could mine bitcoins. And while thats no longer true, you dont have to necessarily be proficient in computers to mine. Youd need some open source, basic software such as GUI miner. As for hardware, you need a motherboard, some graphics processing chips, and fan to cool down your rig.

But today with the heightened interest and the math problems growing exceedingly difficult, outfits with more computing power have come to dominate this activity. Its gotten to the point where bitcoin mining centers have become the majority of the network. These are places around the world where mining takes place on a large-scale, usually where energy is either inexpensive or free. So operators pack a facility with computers, servers, and cooling devices.

Certain areas of China see many such centers due to free hydroelectric power. But the country is looking to curtail bitcoin mining, which may send operations elsewhere. Canada is one possible location. In Iceland, where bitcoin mining has become a sensation, a number of mining centers have been proposed despite officials warning that they will use more electricity than is required to power all the homes in the country. Johann Snorri Sigurbergsson, the spokesman for Icelandic energy firm HS Orka, told the BBC, If all these projects are realized, we wont have enough energy for it.

Want to get a look inside a cryptocurrency mining center? Click here.

Saving Money To Mine Cryptocurrency

Since mining cryptocurrency is so expensive, you need cheap power to mine it. The rigs must be powered with large quantities of electricity. One option is to power your rig and equipment with solar power. Mining operations with the tools and resources to be able to set up solar-powered rigs in the desert and are finding out that it is a good investment. Once you have paid for the solar system, the cost of mining goes way down. It can be nearly free. Doing away with the hefty electrical bill that typically weighs down mining operations leaves room for profit.

According to the site MoneyPug, which is known for being a place to energy switch, another way to cut down costs is to change our provider. Finding cheap reliable energy will make a big difference. Finally, using a product like Node, which makes mining cryptocurrency cheaper than power a toaster.

Mining cryptocurrency is expensive, there is no way around it. But if you can get the equipment and power cheap enough, you can make a lot of money mining bitcoin and others. Balancing computing power, energy costs, the value of the crypto, and more can help you find out if it is worth it to put it in the time and work. As cryptocurrency spreads, some will get cheaper and others will become more expensive. Bitcoin is limited, and therefore will continue to get more and more expensive. There is an urgency to it, but if you get on track early you will be able to make money and find out ways to save.

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The Odds Favor Constant Mining

Because the mathematical problem can only be solved by trial and error , computers must run constantly in order to have the best chance of finding the key, verifying the latest transaction block, and being rewarded with the newest batch of Bitcoin.

This entire process of recording transactions and solving mathematical problems is referred to as mining.

Because this mining is done using powerful computers capable of generating thousands, millions, and even billions of hashes per second, it requires large amounts of electricity.

As the value of Bitcoin rises, more and more people are incentivized to become miners. And because the difficulty of solving each cryptographic problem grows with the network , more and more energy is then used by miners.

At this point, the Bitcoin network consumes about 116 terawatt hours, or 116 trillion watts per year. Thats about 0.5% of the total electricity in the worldmore electricity consumption than in many countries.

Crypto advocates say that much of the energy bitcoin consumes is renewable. But according to the Cambridge Center for Alternative Finance as of September 2020, only about 39% of crypto mining is powered by renewable energy sources.

Antminer S9 Power Consumption Power Consumption Of Asic Bitcoin Miners

How Much Electricity Does A GPU Mining Rig Use?

The Antminer S9 consumes 1,372 Watts for the 14 TH/s batch. 4 of them would consume 5,488 Watts.

This equals a ratio of 98 Watts per TH of the S9s hashing capacity.

Power consumption of 13.5 TH/s Bitcoin miners : 1,323 Watts. 4 of them would consume 5,292 Watts.

Power consumption of 13 TH/s Bitcoin miners : 1,274 Watts. 4 of them would consume 5096 watts.

Power consumption of 12.5 TH/s Bitcoin miners : 1,225 Watts. 4 of them would consume 4,900 Watts.

Power consumption of 11.5 TH/s Bitcoin miners : 1,127 Watts. 4 of them would consume 4,508 Watts.

Efficiency: 0.098 J/GH.

The energy usage figures above were measured using Bitmains own APW3 power supply unit, which operates at 93% efficiency at an ambient temperature of 25 °C. The expected discrepancy is +10%.

Antminer S9 Input Voltage: 11.6 to 13.0 Volts DC.

Some ASIC Bitcoin miners use other types of power supplies such as desktop computer PSUs. However, not all of those are suitable. The Antminer S9 is powered by 6-pin PCI Express power connectors, as shown below. Many GPUs share the same PCI Express power connector.

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How Much Power Does It Take To Mine A Bitcoin With S19 Pros

According to mining pool data it takes about 122,000 TH/s over twenty-four hours to create ~1 bitcoin at todays BTC price, network size, and difficulty level.

And, by simple division we find out that 122,000 TH/s is equivalent to 1,109 S19 Pros at 110 TH/s each. So to find out how much energy these 1,109 ASICs require, we multiply the amount of machines by their kilowatt specification over one day of mining.

1,109 S19s * 3.25 kW * 24 hours = 86,509 kilowatt hours 

Hence, it requires 86,509 kWh to produce one bitcoin with S19 Pros. This is the same as 86.5 megawatt-hour or 0.0865 gigawatt-hour . Read more about electricity unit conversions here.

But Bitcoins network is not only made up of S19 Pros, lesser efficient machines exist. Accordingly, the actual power demand to produce one bitcoin is slightly higher than this first prediction. Lets try other bitcoin miner models which represent the entire network population.

Bitcoins Energy Consumption Explained

    Erika Rasure, is the Founder of Crypto Goddess, the first learning community curated for women to learn how to invest their moneyand themselvesin crypto, blockchain, and the future of finance and digital assets. She is a financial therapist and is globally-recognized as a leading personal finance and cryptocurrency subject matter expert and educator.

    Bitcoin is a digital currency powered by many computers around the world working to maintain the Bitcoin blockchain, a public database of all transactions on the network ever made. Bitcoin miners compete to officially record and verify the transaction and earn bitcoin as a reward.

    These transactions are verified by solving complex cryptographic and mathematical problems for which Bitcoin miners use a lot of power. Together, they use more electricity than many countries. Heres a look at how much power it takes to create new bitcoins and how much power the Bitcoin network uses every day.

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    Why Do Bitcoins Need To Be Mined

    Since they are entirely digital records, there is a risk of copying, counterfeiting, or double-spending the same coin more than once. Mining solves these problems by making it extremely expensive and resource-intensive to try to do one of these things or otherwise “hack” the network. Indeed, it is far more cost-effective to join the network as a miner than to try to undermine it.

    Bitcoin Mining Energy Use

    How Much Does It Cost To Mine Crypto Currency

    The process of discovering a new Bitcoin is called mining’. It has developed from being one person operations managed by tech enthusiasts into an entire industry. Professional outfits running banks of specialist computers hook up to the Bitcoin blockchain network and process data relating to who owns what in the system.

    Bitcoin mining can involve solving puzzles using proof-of-work algorithms. Whilst these might not be integral to verifying movements of the currency, they provide a hurdle to ensure nobody fraudulently edits the global record of all Bitcoin transactions.

    Intense interest in the issue led to the creation of online tools such as the Bitcoin energy consumption index. That index provided up to date reports on mining energy use and showed Bitcoin’s energy usage has increased since the CCAF report was released.

    The annual amount of electrical energy required by Bitcoin is estimated to be 204.50 TWh, which is comparable to the power consumption of Thailand and a carbon footprint of 97.14 MtCO2, which is similar to the carbon footprint of Kuwait.

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    Bitcoin Energy Use: The Electricity Costs Of Cryptocurrency Mining

    When it comes to Bitcoin, most people think about its current worth or how to get in on Bitcoin trading. However, what you may not think about is the energy consumption of Bitcoin.

    According to The University of Cambridge Bitcoin Electricity Consumption Index, Bitcoin has an electricity consumption of 129.24 TWh per year thats more than entire countries such as Argentina and Ukraine, which consume 125.03 and 128.81 TWh each year, respectively. In comparison to Canada, Bitcoin uses approximately a quarter of the electricity that Canada would consume in a year.

    Ever since Bitcoin reached a record-breaking high of over $50,000 USD earlier in the year, its been a trending topic on social media and news outlets.

    Below, well be detailing what exactly Bitcoin is and answering questions such as why Bitcoin uses so much energy and also what the environmental effects of Bitcoin electricity consumption are.

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