We have launched our mobile app, get it now. Call : 9354229384, 9354252518, 9999830584.  

Current Affairs

Bitcoin and electricity consumption

Date: 19 March 2021 Tags: Miscellaneous

Issue

Large number of investors of bitcoin are worried that it will leave a large carbon footprint. This is due to large amount of energy consumed while using bitcoin.

 

Background

Bitcoin is currently worth $1 trillion and large number of people is trying to make use of opportunity to increase their wealth.

 

Details

  • The annual carbon footprint of Bitcoins is almost equal to that of Mumbai or on the national scale of carbon footprint of Slovakia.

  • Studies have shown that Bitcoins leave behind a carbon footprint of 38.10 Mt a year. Carbon footprint of Mumbai is 32 Mt, while Bangalore’s is at 21.60 Mt.

  • Researchers have created Bitcoin Energy Consumption Index which tries to estimate the energy use of the bitcoin network.

 

Relation between bitcoin and electricity

  • Bitcoins are created by process of mining in which high-tech computers are used for long time to perform complex calculations.

  • More the coins are there in the market, longer it will take to mine a new one through the process.

  • Each transaction of bitcoin roughly consumes an average 300kg of carbon dioxide that is equivalent to the carbon footprint produced by 750,000 credit cards swiped.

  • The main concern is that large bitcoin is mined in areas where majority of electricity is produced from coal based power.

 

Other concerns of mining

  • Miners use high-tech computers for hours to formulate new blockchains which result in failure of machines due to high load.

  • As miners continued to buy new chips for running mining process, the world witnessed shortage of chips that has impacted Electric Vehicles manufacturing.

  • Countries such as Iran are using Bitcoin to boost their revenues while its oil exports are suffering from international sanctions.

 

Controlling carbon footprint

  • Governments can ban crypto-currencies in the country as it will affect the prices of a digital currency and result in low mining.

  • Prices of electricity could be increased for high consuming households after cross-verifying that they are indulging in bitcoin mining.